Archangel Diamond Corp. v. Lukoil

• Decision Date: 19 December 2005
• Docket Number: No. 04SC455.,04SC455.
• Citation: 123 P.3d 1187
• Parties: ARCHANGEL DIAMOND CORPORATION, Petitioner, v. LUKOIL and Arkhangelskgeoldobycha, Respondents.
• Court: Colorado Supreme Court

123 P.3d 1187

ARCHANGEL DIAMOND CORPORATION, Petitioner, v. LUKOIL and Arkhangelskgeoldobycha, Respondents.

No. 04SC455.

Supreme Court of Colorado, En Banc.

November 21, 2005.

As Modified on Denial of Rehearing December 19, 2005.

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Dorsey & Whitney, LLP., Tucker K. Trautman, Van Aaron Hughes, Denver, for Petitioner.

Davis Graham & Stubbs, LLP., M. Andrew Low, Tom McNamara, Anthony Shaheen, Denver, Winston & Strawn, LLP., Linda Coberly, Scott Glauberman, Chicago, IL, for Respondent, Arkhangelskgeoldobycha.

Rothgerber Johnson & Lyons, LLP., Frederick J. Baumann, Douglas B. Tumminello, Denver, for Respondent, Lukoil.

KOURLIS, Justice.

We granted certiorari to review the court of appeals' decision in Archangel Diamond Corp. v. Arkhangelskgeoldobycha, 94 P.3d 1208 (Colo.App.2004), in which that court held that a trial court addressing a C.R.C.P. 12(b)(2) motion may decide disputed jurisdictional facts without holding an evidentiary hearing. We now conclude that a trial court may not decide material issues of disputed jurisdictional fact against a plaintiff without such a hearing. Our case law and rules indicate that a plaintiff must establish a prima facie case of personal jurisdiction to overcome a C.R.C.P. 12(b)(2) motion to dismiss. In order to rebut allegations of personal jurisdiction set forth in the complaint, the defendant may file affidavits. The plaintiff may file counter-affidavits. When competent evidence in the parties' affidavits is conflicting, the court must resolve the conflicts in favor of the plaintiff. The court may not resolve disputed issues of fact against the plaintiff absent an evidentiary hearing.

Applying that precept to this case, we conclude that the plaintiff made a prima facie showing of personal jurisdiction over one of the defendants, Lukoil, and that the trial court erred in resolving disputed issues of material fact against the plaintiff to conclude otherwise. As to the defendant Arkhangelskgeoldobycha, the plaintiff failed to make a prima facie showing of personal jurisdiction and the trial court therefore did not err in granting that defendant's motion to dismiss. We thus reverse in part, affirm in part and remand the case to the court of appeals to consider any remaining unaddressed issues raised on appeal to that court relating to Lukoil.

I. Background and Proceedings Below

This case arises from a string of contracts entered into between the parties or their predecessors concerning the development of a Russian diamond deposit. Petitioner, Archangel Diamond Corporation ("Archangel"), is a Canadian corporation whose principal place of business was in Colorado at the time this lawsuit was filed.¹ The Respondents, Arkhangelskgeoldobycha ("AGD") and Lukoil, are both Russian corporations with their principal places of business in Russia.

In 1993, Archangel and AGD entered into an agreement ("1993 Agreement") whereby Archangel would finance, and AGD would explore, the Arkhangelsk diamond deposit in northern Russia. If the exploration proved fruitful, the contract called for AGD to turn over the diamond license it obtained from the Russian government to a joint stock company to be formed by the parties. In turn, the joint stock company would develop the diamond deposit. The 1993 Agreement was both negotiated and executed in Russia and called for the resolution of any disputes arising from it to be arbitrated in Sweden pursuant to United Nations-approved rules.

The parties decided to create the joint stock company in 1994, in accordance with a joint activity agreement ("1994 Agreement") that was negotiated and executed in Russia and that provided that any disputes arising from it would be resolved in the Russian court system. The joint stock company itself was formed in accordance with Russian law.

Disputes arose between the parties in 1996 after the exploration revealed that the diamond deposit was worth billions of dollars. In 1998, Archangel moved its principal place of business from Canada to Colorado. Subsequently, and in accordance with the 1993 Agreement, Archangel initiated arbitration proceedings to resolve the contractual disputes in Sweden. Soon thereafter, in 1999, the parties attempted to resolve their disputes in a new contract ("1999 Agreement") which essentially reaffirmed the parties' original obligations under the earlier contracts. The 1999 Agreement failed to resolve the disputes, however, and Archangel brought suit in Denver District Court in November of 2001 on contract and tort theories after AGD allegedly failed to meet its contractual obligations.

AGD and Lukoil moved to dismiss under C.R.C.P. 12(b)(2). The trial court did not hold an evidentiary hearing. Rather, it ruled on the motions based only on the complaint and the affidavits submitted by the parties. After resolving certain disputed jurisdictional facts in favor of the defendants, the trial court granted the motions.

Archangel appealed. The court of appeals concluded that the trial court had weighed and resolved disputed jurisdictional facts without conducting a hearing, but held that the court was permitted to do so. See Archangel Diamond Corp., 94 P.3d at 1216. Archangel subsequently petitioned for and we granted certiorari.

II. Analysis

We granted certiorari to decide whether, when ruling on a C.R.C.P. 12(b)(2) motion, a trial court may weigh and resolve disputed jurisdictional facts without holding a hearing.² Archangel argues that its due process rights were violated when the trial court weighed and resolved disputed jurisdictional facts against it without first allowing discovery and conducting an evidentiary hearing. AGD counters that the trial court did not actually resolve any disputed material facts pertaining to its personal jurisdiction over them. Rather, AGD argues, the trial court found that the undisputed facts before it did not establish a prima facie showing of personal jurisdiction. Lukoil's argument is essentially the same as AGD's: that the trial court did not err by failing to hold an evidentiary hearing because there were no material disputed jurisdictional facts, and the undisputed jurisdictional facts did not add up to a prima facie showing of personal jurisdiction over it.

We conclude that a trial court must not weigh and resolve disputed facts raised in a 12(b)(2) motion unless it conducts an evidentiary hearing. We begin our analysis by clarifying the proper procedure for addressing a 12(b)(2) motion to dismiss. Next, in light of the proper procedure, we review de novo whether Archangel established the prima facie case of personal jurisdiction necessary to defeat AGD's and Lukoil's 12(b)(2) motions.

Proper Procedure for Addressing a 12(b)(2) Motion

We begin by noting that C.R.C.P. 12(b)(2) is virtually identical to its federal counterpart. See F.R.C.P. 12(b)(2). As such, we may turn to federal precedent for guidance in clarifying our procedure for addressing a 12(b)(2) motion to dismiss. Bd. of County Comm'rs v. Dist. Ct., 172 Colo. 311, 313, 472 P.2d 128, 129 (1970)(noting the similarities between C.R.C.P. 12(b) and F.R.C.P. 12(b)); accord Benton v. Adams, 56 P.3d 81, 86 (Colo.2002) (comparing C.R.C.P. 15(a) to F.R.C.P. 15(a)); Leidy's v. H2O Eng'g, Inc., 811 P.2d 38 (Colo.1991)(using federal case law in analyzing C.R.C.P. 52).

In its discretion, a court may address a 12(b)(2) motion prior to trial based solely on the documentary evidence or by holding a hearing. See FDIC v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir.1992); Ten Mile Indus. Park v. W. Plains Serv. Corp., 810 F.2d 1518, 1524 (10th Cir.1987). These options are not mutually exclusive. Data Disc, Inc. v. Sys. Tech. Assocs. Inc., 557 F.2d 1280, 1285 (9th Cir.1977); see Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir.1995). However, the plaintiff's burden of proof on the question of personal jurisdiction depends on the method the court employs to decide the 12(b)(2) motion. Oaklawn, 959 F.2d at 174; see Boit v. Gar-Tec Prods. Inc., 967 F.2d 671, 676 (1st Cir.1992).

Where the court decides the motion only on the documentary evidence, the plaintiff need only demonstrate a prima facie showing of personal jurisdiction to defeat the motion.³ Benton v. Cameco Corp., 375 F.3d 1070, 1074 (10th Cir.2004); Oaklawn, 959 F.2d at 174. A prima facie showing exists where the plaintiff raises a reasonable inference that the court has jurisdiction over the defendant. See Keefe v. Kirschenbaum & Kirschenbaum, P.C., 40 P.3d 1267, 1272 (Colo.2002). Documentary evidence consists of the allegations in the complaint, as well as affidavits and any other evidence submitted by the parties. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir.1998); Ten Mile, 810 F.2d at 1524. Similar to the court's role in addressing a motion for summary judgment, a court addressing a 12(b)(2) motion on documentary evidence alone acts as a "data collector" and not a factfinder. Foster-Miller, 46 F.3d at 145; see Leidy's, 811 P.2d at 39. Accordingly, the allegations in the complaint must be accepted as true to the extent they are not contradicted by the defendant's competent evidence, and where the parties' competent evidence presents conflicting facts, these discrepancies must be resolved in the plaintiff's favor. Foster-Miller, 46 F.3d at 145; Behagen v. Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th Cir.1984); Leidy's, 811 P.2d at 40. The purpose of the light prima facie burden of proof at this early stage of litigation is simply to screen out "cases in which personal jurisdiction is obviously lacking, and those in which the jurisdictional challenge is patently bogus." Foster-Miller, 46 F.3d at 145.

Where a trial court elects to resolve a 12(b)(2) motion by holding an evidentiary hearing, the plaintiff's burden increases. At that juncture, the plaintiff must establish jurisdiction by a preponderance of the evidence. I...