Archangel Diamond Corp. v. Arkhangelskgeoldobycha

• Decision Date: 25 March 2004
• Docket Number: No. 02CA2368.,02CA2368.
• Citation: 94 P.3d 1208
• Parties: ARCHANGEL DIAMOND CORPORATION, Plaintiff-Appellant and Cross-Appellee, v. ARKHANGELSKGEOLDOBYCHA, Defendant-Appellee and Cross-Appellant, and Lukoil, Defendant-Appellee.
• Court: Colorado Court of Appeals

94 P.3d 1208

ARCHANGEL DIAMOND CORPORATION, Plaintiff-Appellant and Cross-Appellee, v. ARKHANGELSKGEOLDOBYCHA, Defendant-Appellee and Cross-Appellant, and Lukoil, Defendant-Appellee.

No. 02CA2368.

Colorado Court of Appeals, Div. II.

March 25, 2004.

Rehearing Denied June 17, 2004.

Dorsey & Whitney, LLP, Tucker K. Trautman, Scott P. Sinor, Denver, Colorado; Marks & Sokolov, LLC, Bruce S. Marks, Philadelphia, Pennsylvania, for Plaintiff-Appellant and Cross-Appellee.

Davis, Graham & Stubbs, LLP, Anthony J. Shaheen, Tom McNamara, Denver, Colorado; Winston, & Strawn, LLP, Michael D. Burrows, Robert M. Buschmann, Catherine B. Schumacher, New York, New York, for Defendant-Appellee and Cross-Appellant.

Rothgerber, Johnson & Lyons, LLP, Frederick J. Baumann, Douglas B. Tumminello, Denver, Colorado; Akin, Gump, Strauss, Hauer & Feld, LLP, Michael K. Swan, Trenton T. McKenna, Houston, Texas, for Defendant-Appellee.

Opinion by Judge ROTHENBERG.

In this commercial dispute, plaintiff, Archangel Diamond Corporation, appeals the order dismissing its claims and the summary judgment entered in favor of defendants, Arkhangelskgeoldobycha (AGD) and Lukoil, for lack of personal jurisdiction.

The primary issues in this appeal are (1) whether the trial court erred in resolving factual disputes to determine whether it could exercise personal jurisdiction over the nonresident defendants; and (2) whether the court erred in concluding it lacked such jurisdiction. Because we conclude the trial court properly resolved these issues, we affirm.

I. Background

Archangel is a Canadian public company that has maintained its principal place of business in Canada at all relevant times, except between 1998 and 2002 when it moved its principal office to Colorado.

AGD is a Russian public company in the oil, gas, and mining business with its principal place of business in Arkhangelsk, Russia.

Lukoil is a Russian public company. Its principal place of business is in Moscow, Russia. It owns a majority interest in AGD.

In 1993, AGD's predecessor applied for and obtained a license from the Russian government to explore and develop diamond fields in Arkhangelsk, Russia. The predecessors of Archangel and AGD entered into a contract in which Archangel's predecessor agreed to finance preliminary stages of the exploration and development, and AGD's predecessor agreed to perform geological work under the license. The parties agreed that if initial exploration showed the field would be commercially productive, they would establish a joint stock company that would construct a mine and operate the field, and AGD would grant its rights under the license to that company.

The 1993 agreement was negotiated and executed in Russia. It provided for arbitration of disputes before the Stockholm Chamber of Commerce under the rules of the United Nations Commission for International Trade Law.

After the initial exploration of the diamond fields in 1994, Archangel, AGD, and others formed a Russian joint stock company (joint venture) and entered into a joint activity agreement to use the license. This agreement was negotiated and executed in Russia and provided that disputes arising therefrom were to be resolved in the Russian courts.

In 1996, explorers discovered an area containing diamonds with an estimated worth of $5 billion. However, as of 1998, AGD had not yet transferred the license to the joint venture. Archangel asserts that it negotiated a second agreement with AGD in 1999 requiring AGD to transfer the license rights to the joint venture within 180 days, but the transfer did not occur.

In 2001, Archangel filed this action in Colorado seeking compensatory and exemplary damages and injunctive relief. Archangel alleged that it became a Colorado resident in 1998 when it moved its principal place of business from Canada to Colorado. Archangel asserted tort claims against AGD and Lukoil for fraud, aiding and abetting fraud, conspiracy, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and unjust enrichment. Archangel also asserted a separate tort claim against Lukoil for intentional interference with contractual relations and separate claims against AGD only for breach of contract and breach of good faith and fair dealing.

AGD and Lukoil moved to dismiss on various grounds. The trial court granted the motion and entered judgment in their favor, concluding that it lacked personal jurisdiction over either defendant and that Archangel's tort claims were barred by the economic loss rule.

In 2002, Archangel moved its principal place of business back to Canada.

II. Personal Jurisdiction

Archangel contends the trial court erred in granting defendants' motion to dismiss for lack of personal jurisdiction. According to Archangel, it established personal jurisdiction over AGD and Lukoil because both defendants purposefully availed themselves of the privilege of conducting business activities in Colorado and also committed tortious acts directed into the state. We disagree.

A. Colorado's Long-Arm Statute

The Colorado long-arm statute was intended to extend the personal jurisdiction of Colorado's courts to their maximum limits permissible under the United States and Colorado Constitutions. Keefe v. Kirschenbaum & Kirschenbaum, P.C., 40 P.3d 1267 (Colo.2002).

As relevant here, the Colorado long-arm statute permits the jurisdiction of Colorado courts to extend to causes of action arising from a nonresident defendant's transaction of business within this state or the commission of a tortious act within this state. Section 13-1-124(1)(a)-(b), C.R.S.2003.

To be subject to long-arm statute jurisdiction, a nonresident defendant must have minimum contacts with Colorado or commit some act by which it "purposefully avails itself of the privilege of conducting activities" in Colorado. Scheuer v. Dist. Court, 684 P.2d 249, 251 (Colo.1984)(quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958)).

A plaintiff seeking relief under the long-arm statute must allege sufficient facts to support a reasonable inference that the nonresident defendant has engaged in conduct subjecting the nonresident to personal jurisdiction. A prima facie showing of threshold jurisdiction may be found from allegations in the complaint and from sufficient evidence introduced in any hearing conducted on the matter. Keefe v. Kirschenbaum & Kirschenbaum, P.C., supra; In re Parental Responsibilities of H.Z.G.,

77 P.3d 848 (Colo.App.2003); In re Marriage of Malwitz, 81 P.3d 1076 (Colo.App.2003).

Threshold jurisdiction may be established where tortious conduct initiated in another state causes injury in Colorado and where requiring a defendant to appear in this state would be consistent with due process of law. D & D Fuller CATV Constr., Inc. v. Pace, 780 P.2d 520, 524 (Colo.1989).

B. Due Process

After determining whether the requirements of the long-arm statute have been met, the court must separately determine whether a defendant has the requisite minimum contacts to satisfy due process. See Int'l Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945)

.

Due process requires that individuals have fair warning that a particular activity may subject them to the jurisdiction of another state. They have fair warning when their conduct and connection with the forum state are such that they should reasonably anticipate being haled into court there. Keefe v. Kirschenbaum & Kirschenbaum, P.C., supra.

Unilateral activity by those who claim some relationship with a nonresident defendant does not in itself satisfy the requirement of contact with the forum state. There must be some act by which the nonresident purposefully availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of the forum state's laws. The "purposeful availment" requirement ensures that a nonresident will not be haled into a jurisdiction solely as a result of random or fortuitous contacts. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985); Keefe v. Kirschenbaum & Kirschenbaum, P.C., supra, 40 P.3d at 1270.

"For a nonresident to be subjected to the general jurisdiction of the forum state by his [her, or its] activities there, those activities must be continuous and systematic, of a general business nature." Keefe v. Kirschenbaum & Kirschenbaum, P.C., supra, 40 P.3d at 1271. But "for specific jurisdiction to adjudicate claims arising from [a nonresident's] contacts with the forum state, the fair warning requirement is satisfied as long as the litigation results from alleged injuries that `arise out of or relate to' activities that are significant and purposefully directed by the defendant at residents of the forum." Keefe v. Kirschenbaum & Kirschenbaum, P.C., supra, 40 P.3d at 1271 (quoting Burger King Corp. v. Rudzewicz, supra).

When minimum contacts with the forum state have been established, the court must determine whether the assertion of personal jurisdiction would comport with fair play and substantial justice. The court should consider factors such as the burden on the nonresident, the forum state's interest in adjudicating the dispute, and the plaintiff's interest in obtaining convenient and effective relief. Keefe v. Kirschenbaum & Kirschenbaum, P.C., supra; In re Parental Responsibilities of H.Z.G., supra.

C. Trial Court's Resolution of Factual Disputes

AGD and Lukoil filed a motion pursuant to C.R.C.P. 12(b)(2) asserting lack of personal jurisdiction, and the trial court resolved certain factual disputes before determining the issue. Relying on Leidy's, Inc. v. H2O Engineering, Inc., 811 P.2d 38 (Colo.1991), Archangel contends the trial court was required to resolve all factual disputes in its favor and it erred in failing to do so. We disagree.

In Leidy's, the Colorado Supreme Court stated: "In ruling on a motion to dismiss for lack of...