C&I Eng'g, LLC v. Performance Improvement of Virginia
| Decision Date | 17 April 2012 |
| Docket Number | No. 1 CA-CV 11-0319,No. 1 CA-CV 11-0111,1 CA-CV 11-0111,1 CA-CV 11-0319 |
| Court | Arizona Court of Appeals |
| Parties | C&I ENGINEERING, LLC, a Washington limited liability company, Plaintiff/Appellant, v. PERFORMANCE IMPROVEMENT OF VIRGINIA, a Virginia corporation; STEVEN SWARTHOUT and KATHLEEN SWARTHOUT, husband and wife, Defendants/Appellees. |
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure
By S. Jay Calhoun
Attorneys for Plaintiff/Appellant
Tempe
Owens & Pyper PLC
By Bradley T. Owens
Attorneys for Defendants/Appellees
TIMMER, Judge ¶1 These consolidated appeals stem from the superior court's dismissal of C&I Engineering, LLC's ("C&I") complaint against Performance Improvement of Virginia ("PIV") and Steven and Kathleen Swarthout for lack of personal and subject matter jurisdiction. In addition to challenging the merits of the dismissal, C&I also contests the court's award of attorneys' fees and costs to PIV and the Swarthouts. For the reasons that follow, we dismiss the appeal in CV 11-0111. In CV 11-0319, we affirm in part, reverse in part, and remand for further proceedings.
¶2 In August 2009, C&I, a Washington company authorized to conduct business in Arizona, entered in a written contract with PIV, a Virginia corporation, for the latter to perform services at a nuclear generating station located in California. Steven Swarthout, a Virginia resident, signed the contract for PIV in his capacity as President. The contract includes aforum-selection clause, which provides that any lawsuit arising from the contract will be brought in the appropriate court in Maricopa County, Arizona.2
¶3 Disputes arose between the parties and, in May 2010, C&I filed a complaint in the superior court in Maricopa County asserting claims for breach of contract against PIV and intentional interference with business expectancy against the Swarthouts. The complaint also asks the court to pierce PIV's corporate veil and hold Mr. Swarthout liable for PIV's breach of contract.3 Appellees moved the court to dismiss the complaint pursuant to Arizona Rule of Civil Procedure ("Rule") 12(b)(1), (2), and (6) because (1) the court lacked personal jurisdiction over the Swarthouts, (2) the court lacked subject matter jurisdiction, and (3) C&I failed to state a cognizable claim against the Swarthouts. After briefing and oral argument, the court granted the motion in a signed minute entry on the basis of lack of personal and subject matter jurisdiction. C&I immediately filed a notice of appeal (CV 11-0111). Thereafter, on motion of Appellees, the court awarded them $7,819 in attorneys' fees and $223 in costs and entered judgment. C&Ithen filed a notice of appeal challenging the entire judgment (CV 11-0319). We consolidated the appeals.
¶4 We review the superior court's dismissal for lack of personal and subject matter jurisdiction de novo and view the facts in the light most favorable to C&I as the plaintiff. Rollin v. William V. Frankel & Co., 196 Ariz. 350, 352, ¶ 5, 996 P.2d 1254, 1256 (App. 2000) (citing A. Uberti & C. v. Leonardo, 181 Ariz. 565, 567, 569, 892 P.2d 1354, 1356, 1358 (1995)); Fairway Constructors, Inc. v. Ahern, 193 Ariz. 122, 124, ¶ 6, 970 P.2d 954, 956 (App. 1998). We review whether the court is authorized to award attorneys' fees de novo. Camelback Plaza Dev., L.C. v. Hard Rock Café Int'l., 200 Ariz. 206, 208, ¶ 4, 25 P.3d 8, 10 (App. 2001).
¶5 Under the Arizona long-arm statute, an Arizona court may exercise personal jurisdiction over a nonresident defendant "to the maximum extent permitted" by the Arizona and United States Constitutions. Rule 4.2(a). Arizona courts will exercise personal jurisdiction over a defendant who "has [either] consented to such jurisdiction or . . . has sufficient minimum contacts with the [] state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Bohreer v. Erie Ins. Exch., 216 Ariz.208, 213, ¶ 19, 165 P.3d 186, 191 (App. 2007). With this framework in mind, we address whether the superior court correctly determined it lacked personal jurisdiction over PIV and the Swarthouts.
¶6 Although PIV did not base its motion to dismiss on a lack of personal jurisdiction, and its counsel at oral argument on the motion conceded the superior court possessed personal jurisdiction over PIV, the court nevertheless ruled it lacked personal jurisdiction after conducting a minimum-contacts analysis. On appeal, PIV does not argue in support of the court's ruling concerning personal jurisdiction.
¶7 When a party explicitly consents to personal jurisdiction through an enforceable forum-selection clause in a contract, it obviates the need for the court to conduct a minimum-contacts analysis under the due process clause. Id.; Morgan Bank (Del.) v. Wilson, 164 Ariz. 535, 537, 794 P.2d 959, 961 (App. 1990). "[A] forum selection clause is enforceable as long as it is not the result of unfair bargaining or so unreasonable that the plaintiff would be deprived of his or her day in court." Bennett v. Appaloosa Horse Club, 201 Ariz. 372, 377, ¶ 19, 35 P.3d 426, 431 (App. 2001). The party attempting to disavow a forum-selection clause bears a heavy burden to prove these circumstances. Id. at 377, ¶ 20, 35 P.3d at 431. ¶8 PIV executed a contract with C&I in which the parties selected Arizona as the forum state to resolve any disputes arising under the contract. Nothing in the record supports a finding that the forum-selection clause results from unfair bargaining or is so unreasonable it would deprive PIV of its day in court. Consequently, the forum-selection clause is sufficient to confer personal jurisdiction over PIV regardless of the quality of its contacts with Arizona. The superior court erred by finding it lacked personal jurisdiction over PIV.
¶9 C&I does not make any arguments that Arizona may exercise personal jurisdiction over the Swarthouts due to their minimum contacts with the state, and the record does not reveal such contacts. Instead, C&I argues the forum-selection clause in the contract between C&I and PIV also serves to confer personal jurisdiction over the Swarthouts. C&I acknowledges that the Swarthouts are not signatories to the contract. But, relying on Schwab Sales, Inc. v. GN Construction Company, 196 Ariz. 33, 992 P.2d 1128 (App. 1998), C&I argues that because its claims against the Swarthouts arise from the contract, and the forum-selection clause applies to claims "directly or indirectly" related to the contract, the forum-selection clause applies to them. Schwab Sales, however, addressed claims "arising under contract" in relation to a discretionary award ofattorneys' fees pursuant to Arizona Revised Statutes ("A.R.S.") § 12-341.01(A) (West 2012).4 Schwab Sales, 196 Ariz. at 37, ¶ 11, 992 P.2d at 1132. Neither Schwab Sales nor any known authority holds that a party can bind others to a forum-selection clause merely by bringing claims against them that arise from the contract containing the clause. Indeed, such a holding is at odds with the general notion that only parties to a contract and their assignees are bound by its provisions.
¶10 Next, C&I argues the Swarthouts are bound by the forum-selection clause because Mr. Swarthout signed the contract for PIV and performed under the contract, so "he had fair warning that his actions subjected him to personal jurisdiction." But the law is clear that an agent who signs an agreement on behalf of a principal is not personally bound. See Ferrarell v. Robinson, 11 Ariz. App. 473, 475, 465 P.2d 610, 612 (1970) ().
¶11 C&I lastly argues the Swarthouts voluntarily subjected themselves to jurisdiction in Arizona courts by asking for attorneys' fees in the reply concerning their motion to dismiss.To support its argument, C&I relies on National Homes Corporation v. Totem Mobile Home Sales, Inc., 140 Ariz. 434, 682 P.2d 439 (App. 1984), which held that a defendant waives the defense of insufficiency of service of process "by seeking affirmative relief from the court, which usually arises when a defendant files a voluntary counter-claim or cross-claim." Id. at 437, 682 P.2d at 442; see also Carlton v. Emhardt, 138 Ariz. 353, 356, 674 P.2d 907, 910 (App. 1983) (). C&I does not cite any authority supporting its contention that a request for fees is a request for "affirmative relief" on par with a counterclaim or cross-claim, and we are not aware of any. See 5C Charles Alan Wright et al., Federal Practice & Procedure § 1391 (West 2011) (discussing the principle in terms of asserting causes of action). And a request for fees expended to obtain a dismissal based on lack of jurisdiction is not inconsistent with an assertion the court lacks jurisdiction to adjudicate the plaintiff's claim; it is simply collateral to the challenge. See Moore v. Permanente Med. Grp., Inc., 981 F.2d 443, 445 (9th Cir. 1992) (); see also Prime Ins. Syndicate, Inc. v. Soil TechDistribs. Inc. , 270 F. App'x 962, 965 (11th Cir. 2008) (to same effect). For these reasons, we...
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