Sproul v. ROB & CHARLIES, INC.

• Decision Date: 15 August 2012
• Docket Number: Docket No. 31,167.
• Citation: 304 P.3d 18
• Court: Court of Appeals of New Mexico
• Parties: Archibald A. SPROUL and Lisa McFadden Sproul, Plaintiffs, v. ROB & CHARLIES, INC., GT Bicycles, Inc., Pacific Cycle, Inc., and Ishiwata, Defendants, and Rob & Charlies, Inc., Third–Party Plaintiff–Appellant, v. Joy Industrial Co., Ltd., Third–Party Defendant–Appellee, and J & B Imports, Inc., Quality Bicycle Products, Inc., and Dorel Industries, Inc., Third–Party Defendants.

304 P.3d 18

Archibald A. SPROUL and Lisa McFadden Sproul, Plaintiffs,

v.ROB & CHARLIES, INC., GT Bicycles, Inc., Pacific Cycle, Inc., and Ishiwata, Defendants,andRob & Charlies, Inc., Third–Party Plaintiff–Appellant,

v.Joy Industrial Co., Ltd., Third–Party Defendant–Appellee,andJ & B Imports, Inc., Quality Bicycle Products, Inc., and Dorel Industries, Inc., Third–Party Defendants.

Docket No. 31,167.

Court of Appeals of New Mexico.

Aug. 15, 2012.

Hatcher & Tebo, P.A., Scott P. Hatcher, Christopher J. Tebo, Santa Fe, NM, for Appellant.

McClaugherty & Silver, P.C., Tamara R. Safarik, Joe L. McClaugherty, Santa Fe, NM, for Appellee.

OPINION

VANZI, Judge.

{1} This case arises from an indemnification claim brought by Third–Party Plaintiff Rob and Charlies, Inc. (R & C), a bicycle retailer doing business in New Mexico, against Third–Party Defendant Joy Industrial Co., Ltd. (Joy Co.), a foreign manufacturer of bicycle parts. R & C appeals a judgment of the district court granting Joy Co.'s motion to dismiss for lack of personal jurisdiction. The district court concluded that Joy Co. lacked the constitutionally required minimum contacts with New Mexico necessary to support personal jurisdiction and that, even if the necessary minimum contacts were established, the exercise of jurisdiction over Joy Co. would nevertheless offend traditional notions of fair play and substantial justice. We disagree with the district court and reverse. Further, this Opinion clarifies the standards to be used for evaluating whether a person or entity is subject to the jurisdiction of New Mexico courts despite not having been present in the state, either at the time of the suit or at the time of the alleged injury, and despite not having consented to the exercise of jurisdiction.

I. BACKGROUND

{2} In 1988, Plaintiff Archibald Sproul purchased a GT All–Terra Mountain Bicycle from R & C, a retail bicycle store located in Santa Fe, New Mexico. Sproul was riding that bicycle on May 19, 2003, at a BMX course in Santa Fe County. As he went over a bump, the front wheel separated from the bicycle's front fork assembly. Sproul was thrown off the bicycle and, as a result, he suffered serious, permanent injuries. On May 18, 2006, Sproul filed suit against R & C; GT Bicycles, Inc.; Pacific Cycle, Inc. (the companies that manufactured the bicycle); and Ishiwata (the company that manufactured the bike's frame and fork). Sproul alleged that, among other things, Defendants' negligently designed, manufactured, assembled, and sold the bicycle, quick-release hub, and front fork, which failed, causing the front wheel to fall off.

{3} R & C filed a third-party complaint for indemnity against Joy Co. in May 2008. Joy Co. is the manufacturer of the quick-release mechanism on the GT bicycle that Sproul purchased from R & C. Joy Co. has its principal places of business in China and Taiwan, and its two manufacturing facilities are located in China. Joy Co. “sells its products to the global bicycle marketplace through a network of agents and suppliers.”

{4} R & C claimed that it was entitled to a right of indemnification against Joy Co. because Joy Co. was the upstream manufacturer of the allegedly defective quick-release mechanism that was ultimately sold by R & C in New Mexico. Joy Co. responded by filing a motion to dismiss for lack of personal jurisdiction. Joy Co. contended that it had no distributors or clients in New Mexico and did not know where the bicycles that incorporated its quick-release mechanisms were sold. Therefore, Joy Co. argued, there were no facts indicating that it had the necessary systematic and continuous contacts or purposeful contact required to subject it to either general or specific jurisdiction in New Mexico.

{5} After allowing the parties to conduct limited discovery on the jurisdictional issue, the district court considered their written submissions and oral arguments and ultimately granted Joy Co.'s motion to dismiss. Specifically, the court concluded that R & C failed to show as a matter of law that Joy Co. had sufficient contacts with New Mexico to enable it to assert personal jurisdiction. The district court further found that the exercise of jurisdiction over Joy Co. would offend traditional notions of fair play and substantial justice. The district court denied R & C's motion for reconsideration; however, it certified the matter for interlocutory appeal, and we granted the application.

II. STANDARD OF REVIEW

{6} The determination whether a district court has personal jurisdiction over a nonresident defendant is a question of law that we review de novo. Sublett v. Wallin, 2004–NMCA–089, ¶ 11, 136 N.M. 102, 94 P.3d 845. Where, as here, the district court bases its ruling on the parties' pleadings, attachments, and non-evidentiary hearings, we apply a standard of review mirroring that of our standard governing appeals from summary judgment. Id. “We construe the pleadings and affidavits in the light most favorable to the complainant, and the complainant need only make a prima facie showing that personal jurisdiction exists.” Id.; see Tercero v. Roman Catholic Diocese, 2002–NMSC–018, ¶ 5, 132 N.M. 312, 48 P.3d 50. Accordingly, dismissal is proper in this case only if all the specific facts that R & C alleges collectively fail to state a prima facie case for jurisdiction over Joy Co.

III. ANALYSIS

{7} R & C raises eight issues on appeal. All of these issues can fairly be collapsed into one question: whether Joy Co. has sufficient minimum contacts with New Mexico necessary to support personal jurisdiction and, thus, whether the district court erred by granting Joy Co.'s motion to dismiss. The answer requires us to employ a two-step analysis. The first step is to determine whether personal jurisdiction over Joy Co. would be in accordance with the requirements of New Mexico's long-arm statute. Concluding that jurisdiction may properly be extended under our long-arm statute, we then proceed to the second step. At step two of the analysis, we examine whether the exercise of personal jurisdiction would offend the Due Process Clause of the United States Constitution. Whether a state may exercise personal jurisdiction over a nonresident civil defendant depends on the nature and quality of the defendant's contacts with the forum. In that regard, personal jurisdiction has been described as being either “general” or “specific.” R & C contends that both exist in this case. In addressing R & C's respective arguments, we determine that the state may not exercise general jurisdiction over Joy Co. However, in clarifying our personal jurisdiction jurisprudence—especially with respect to the stream of commerce theory of jurisdiction—Joy Co. has minimum sufficient contacts to subject it to specific jurisdiction in New Mexico under the standard set forth in World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Further, the volume of contacts Joy Co. has with New Mexico make it reasonable to subject Joy Co. to personal jurisdiction. This Opinion ends by analyzing the United States Supreme Court's opinion in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), and its more recent decision in J. McIntyre Machinery, Ltd. v. Nicastro, –––U.S. ––––, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011), and it addresses why personal jurisdiction cases are not evaluated under any of the competing versions of the stream of commerce theories in those cases.

A. New Mexico's Long–Arm Statute

{8} In construing whether a nonresident defendant may be subject to jurisdiction in the forum state, this Court looks to New Mexico's long-arm statute, which provides, in pertinent part,

Any person, whether or not a citizen or resident of this state, who in person or through an agent does any of the acts enumerated in this subsection thereby submits himself or his personal representative to the jurisdiction of the courts of this state as to any cause of action arising from:

(1) the transaction of any business within this state;

....

(3) the commission of a tortious act within this state[.]

NMSA 1978, § 38–1–16(A)(1), (3) (1971). The term “person” as used in the statute includes corporations. See, e.g., Roberts v. Piper Aircraft Corp., 100 N.M. 363, 367–68, 670 P.2d 974, 978–79 (Ct.App.1983) (holding that under our long-arm statute, New Mexico could assert personal jurisdiction over an Oklahoma service provider who advertised nationally and directly served a New Mexican customer). New Mexico courts do not require a technical determination whether a defendant has committed one of the enumerated acts. Zavala v. El Paso Cnty. Hosp. Dist., 2007–NMCA–149, ¶ 10, 143 N.M. 36, 172 P.3d 173. Instead, because we “have construed the state long-arm statute as being coextensive with the requirements of due process, [our] analysis collapses into a single search for the outer limits of what due process permits.” F.D.I.C. v. Hiatt, 117 N.M. 461, 463, 872 P.2d 879, 881 (1994) (internal quotation marks and citation omitted). The question of personal jurisdiction therefore hinges on federal law.

B. The Due Process Clause

{9} “The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid personal judgment against a nonresident defendant.” World–Wide Volkswagen, 444 U.S. at 291, 100 S.Ct. 559. Due process is satisfied only when a defendant has sufficient minimum contacts with the forum state so that the assertion of jurisdiction over the defendant will not violate “traditional notions of fair play and substantial justice.” Goodyear Dunlop Tires Operations, S.A. v. Brown, –––U.S. ––––, ––––, 131 S.Ct. 2846, 2853, 180 L.Ed.2d 796 (2011) (internal quotation marks and citation omitted); Tercero, 2002–NMSC–018, ¶ 7, 132 N.M. 312, 48 P.3d 50. Accordingly, we must first determine whether a defendant has sufficient minimum contacts with New Mexico. Burger King Corp. v. Rudzewicz, 471...