Abbott G. M. Diesel, Inc. v. Piper Aircraft Corp.

• Citation: 578 P.2d 850
• Decision Date: 14 April 1978
• Docket Number: No. 15016,15016
• Parties: ABBOTT G. M. DIESEL, INC., a Delaware Corporation, Plaintiff and Appellant, v. PIPER AIRCRAFT CORPORATION, a Corporation, and Piper Corporate Aircraft Center-West, a corporation, aka Corpac-West, Defendant and Respondent.
• Court: Supreme Court of Utah

Page 850

578 P.2d 850

ABBOTT G. M. DIESEL, INC., a Delaware Corporation, Plaintiff and Appellant, v. PIPER AIRCRAFT CORPORATION, a Corporation, and Piper Corporate Aircraft Center-West, a corporation, aka Corpac-West, Defendant and Respondent.

No. 15016.

Supreme Court of Utah.

April 14, 1978.

Parsons, Behle & Latimer, F. Alan Fletcher, Kent W. Winterholler, Salt Lake City, for plaintiff and appellant.

Christensen, Gardiner, Jensen & Evans, Ray R. Christensen, Salt Lake City, for Piper Aircraft.

Snow, Christensen, & Martineau, John H. Snow, Salt Lake City, for Corpac-West.

WILKINS, Justice:

All statutory references are to Utah Code Ann., 1953, as amended, unless otherwise stated.

On or about November 8, 1974, plaintiff, Abbott G. M. Diesel (hereinafter "Abbott"), and co-defendant, Piper Corporate Aircraft Center-West aka Corpac-West (hereinafter "Corpac"), entered into a purchase agreement wherein Abbott agreed to buy, and Corpac agreed to sell, a Piper PA-31-P aircraft manufactured by co-defendant, Piper Aircraft Corporation (hereinafter "Piper").

Abbott contends that (1) this aircraft suffered an inordinate number of equipment and structural failures and defects beginning immediately after its delivery in November of 1974 and continuing regularly until January 9, 1976, and (2) these failures make this aircraft unairworthy, unreliable, not of marketable quality and unfit for its intended use.

Abbott's counsel wrote several letters to Piper, copies of which were sent to Corpac, informing Piper that the aircraft's numerous malfunctions rendered it unsafe and unacceptable. Piper responded assuring Abbott that Piper would repair the aircraft at its expense in an attempt to make it airworthy. The aircraft was returned to Piper's plant at Lockhaven, Pennsylvania, and after Piper performed approximately thirty different repairs during a three week period, Piper informed Abbott that the aircraft was in "good as new" condition. On the return trip of the aircraft to Utah, Abbott contends that it continued to malfunction.

Abbott commenced action in the District Court for Salt Lake County on February 23, 1976, against co-defendants Corpac and Piper for damages claiming breach of contract, breach of warranty, and mutual mistake. (Abbott claims mutual mistake against Corpac only.) Abbott alleges it paid $308,646.27 for the aircraft and seeks damages against Piper in the approximate sum of $192,000.00. The summons was served on both defendants and specifically on Piper at its place of business in Pennsylvania pursuant to Section 78-27-24 (Utah's Long-Arm Statute). Piper argues that it was not subject to the jurisdiction of the Utah courts under this statute and moved to quash the service of summons upon it and dismiss the action for lack of personal jurisdiction. The District Court granted this motion against Piper, and Abbott appeals.

In support of its motion to quash, Piper filed an affidavit of John Leeson, Treasurer of Piper, the substance of which states that: Piper is a Pennsylvania corporation engaged in the business of manufacturing airplanes; it has three manufacturing plants, one in Pennsylvania and two in Florida; it carries on no business in Utah and has no employees or agents here; Piper has no records, bank accounts, investments, property, regional office, or affiliated company in Utah; there are some independent dealers in Utah who sell Piper Aircraft but that Piper has no interest in, control over, or business arrangements with these dealers; there is an independent corporation known as Intermountain Piper Incorporated (hereinafter "Intermountain"), authorized under the laws of the state of Utah and having its principal place of business in Salt Lake City, Utah, which acts as a distributor of Piper aircraft and sells this aircraft to said dealers; Piper owns no interest in Intermountain and the items of aircraft sold by Piper to Intermountain are sold F.A.F. (fly away basis) at Piper's manufacturing plants.

Abbott, in resisting the motion to quash filed the affidavit of William Farley, President of Intermountain, the substance of which states that: Intermountain is a corporation authorized under the laws of Utah; it is an authorized distributor of Piper by written contract between these two corporations and allows Intermountain to establish an organization in behalf of Piper for sale of Piper aircraft and other products within Utah and elsewhere; Piper initiated a program known as Piper Flight Centers for the purpose of establishing flight training in and rental of Piper aircraft, that program being available to Piper dealers and other airport operators through Piper distributors, including Intermountain; Piper encourages its distributors, within their areas, to establish these centers, and that there were five such centers in Utah; a uniform type of sign called "Piper Flite Center" has been established by Piper for the centers; said signs are the property of Intermountain in its area of responsibility but become the property of Piper upon the termination of Intermountain's distributorship; Intermountain has distributed to these centers information provided by Piper; Piper has authorized the dealers to use the Piper Flight Center format, design, program, system, lesson plans, and emblems as encouragement for the residents of Utah to rent, lease, or purchase Piper aircraft products; Intermountain has handled for transmittal to Piper various warranty items for Piper from and through such dealers and has transmitted in behalf of Piper to said dealers various credits on warranty of Piper products; Piper employees from time to time inspect the dealers' facilities in Utah for the purpose of approving them as Piper maintenance facilities or Piper Service Centers; Piper regularly distributes through the mail notices pertaining to its products to registered Piper aircraft owners within Utah.

Abbott also filed an affidavit of Robert Abbott, President of Abbott, the substance of which states that: Abbott for several years has received numerous solicitations by direct mailing in the form of sales literature and other communications from Piper's corporation offices at Lockhaven, Pennsylvania; Piper solicits business of Utahns, including Abbott, through advertisements placed in nationally circulated trade magazines; and Piper employs a regional sales representative and a regional service representative, both of whom reside outside of Utah, who regularly visit Utah at five to six week intervals to promote customer relations and confer with Piper's sales outlets with respect to sales and service matters.

The parties disagree in the affidavits about many of the enumerated facts and disagree about the inferences to be drawn therefrom. Abbott contends that either under a "doing business" or "minimum contact" test that Piper has subjected itself to the jurisdiction of Utah Courts while Piper contends otherwise. No findings of fact were made or filed. We therefore reverse and remand for the purpose of having a hearing conducted below where conflicts may be resolved and findings of fact made.

The Utah Legislature enacted the long-arm statute in 1969 ¹ and it states in Sec. 78-27-24 that any person submits to personal jurisdiction in Utah concerning any claim arising from the following acts:

(1) The transaction of any business within the state; ²

(2) Contracting to supply services or goods in this state;

(3) The causing of any injury within this state whether tortious or by breach of warranty;

(4) The ownership, use, or possession of any real estate situated in this state;

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

(6) With respect to actions of divorce and separate maintenance, the maintenance in this state of a matrimonial domicile at the time the claim arose or the commission in this state of the act giving rise to the claim.

Sec. 78-27-22 in a statement of legislative policy and intent declares that the long-arm statute "should be applied so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of...