Arguello v. Industrial Woodworking Mach. Co.

• Decision Date: 21 September 1992
• Docket Number: No. 910046,910046
• Parties: Paul ARGUELLO, Plaintiff and Appellant, v. INDUSTRIAL WOODWORKING MACHINE CO., Defendant and Appellee.
• Court: Utah Supreme Court

Page 1120

838 P.2d 1120

Paul ARGUELLO, Plaintiff and Appellant, v. INDUSTRIAL WOODWORKING MACHINE CO., Defendant and Appellee.

No. 910046.

Supreme Court of Utah.

Sept. 21, 1992.

Martin W. Custen, James R. Hasenyager, Ogden, for plaintiff and appellant.

Douglas B. Thomas, Ogden, for defendant and appellee.

ZIMMERMAN, Justice:

Paul Arguello appeals from an order dismissing his complaint against Industrial Woodworking Machine Co. ("Industrial") for lack of personal jurisdiction. The issue presented is whether the trial court erred in holding that Industrial, a Texas company, lacked sufficient contacts with Utah to permit assertion of personal jurisdiction over it. See Utah Code Ann. § 78-27-24. We affirm.

We first note the standard of review. Where a pretrial jurisdictional decision has been made on documentary evidence only, an appeal from that decision presents only legal questions that are reviewed for correctness. Cf. Anderson v. American Soc'y of Plastic and Reconstructive Surgeons, 807 P.2d 825, 827 (Utah 1990), cert. denied, 502 U.S. 900, 112 S.Ct. 276, 116 L.Ed.2d 228 (1991).

The facts are taken from the parties' pleadings. See id. Arguello relied on facts alleged in his unverified complaint for his assertion of jurisdiction. Industrial responded to the complaint with a motion to dismiss for lack of jurisdiction and a supporting affidavit setting forth its version of the jurisdictional facts. Arguello did not controvert the affidavit. Therefore, for purposes of this appeal, the facts asserted in the affidavit are taken as true and the facts recited in the complaint are considered only to the extent that they do not contradict the affidavit. See id.; Pentecost v. Harward, 699 P.2d 696, 698 (Utah 1985); Roskelley & Co. v. Lerco Inc., 610 P.2d 1307, 1310 (Utah 1980).

In 1971, Industrial, a Texas company, sold a large, stationary finger jointing machine to Pickering Lumber Co. ("Pickering") in California. Prior to delivery, Industrial made numerous additions and modifications to the machine to suit Pickering's woodworking needs. Pickering paid sales tax on the purchase of the machine.

By 1982, the machine had made its way to Arguello's employer, Weathershield, Inc., in Logan, Utah. The record is silent as to the machine's ownership and location between its delivery to Pickering in 1971 and 1982. In July of 1982, Weathershield requested that Industrial send a service representative to examine the finger jointing machine and to consult with Weathershield as to how its efficiency could be increased.

Industrial sent a service representative to Utah. He was told that wood being worked in the machine would occasionally pop out, an occurrence that required the machine to be run at less than maximum speed. After inspecting the machine, the service representative noted that it had been modified since leaving Industrial's possession. He advised Weathershield how to correct the problem, but made no effort to fix it because Weathershield indicated that it would undertake any needed repairs or modifications. Industrial had no further contact with the machine.

In 1987, while working for Weathershield, Arguello allegedly injured his wrist as he used the machine. Arguello claims that he was harmed by an unreasonably dangerous condition in the machine, i.e., the tendency of wood to pop out of the machine while running, and alleges that the machine was defective both because it lacked guards to protect the operator from the ejected wood and because it lacked a warning of that dangerous condition.

After his injury, Arguello filed an action against Industrial in a Utah district court and served Industrial in Texas. Industrial moved to dismiss the complaint for lack of personal jurisdiction. In support of its motion, Industrial filed an affidavit specifying its contacts with the machine and Utah. The district court granted Industrial's motion and dismissed Arguello's claims. Arguello appealed to the Utah Court of Appeals, which transferred the case to this court under Utah Rule of Appellate Procedure 44. Utah R.App.P. 44.

In support of his claim that the district court erred in refusing to take jurisdiction, Arguello advances two theories: first, that Industrial's contacts are sufficiently related to the specific harm suffered and made the subject of his action to give the court personal jurisdiction; second, and alternatively, that the sale of the machine in California placed it in the stream of commerce, which inevitably brought it to Utah, and that this establishes sufficient minimum contacts with Utah for jurisdiction to attach.

Before considering Arguello's two theories, some background is warranted. Personal jurisdiction can be broken down into two categories. Either a court has general jurisdiction over a defendant or it has specific jurisdiction. General personal jurisdiction permits a court to exercise power over a defendant without regard to the subject of the claim asserted. For such jurisdiction to exist, the defendant must be conducting substantial and continuous local activity in the forum state. In contrast, specific personal jurisdiction gives a court power over a defendant only with respect to claims arising out of the particular activities of the defendant in the forum state. For such jurisdiction to exist, the defendant must have certain minimum local contacts. See generally Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984); Abbott G.M. Diesel, Inc. v. Piper Aircraft Corp., 578 P.2d 850, 853 n. 6 (Utah 1978) (quoting Kristine Strachan, In Personam Jurisdiction in Utah, 1977 Utah L.Rev. 235, 253-54, 264). In the present case, it is clear that Industrial was not doing business in this state to such an extent that our courts would have general jurisdiction over it. Therefore, Arguello must show that grounds exist for specific personal jurisdiction.

Generally, whether a state can exercise specific personal jurisdiction over a nonresident defendant is determined by two factors: the breadth of the forum state's jurisdictional statute and the due process limitations on jurisdiction imposed by the Fourteenth Amendment to the United States Constitution. See Parry v. Ernst Home Center Corp., 779 P.2d 659, 661 (Utah 1989); Bradford v. Nagle, 763 P.2d 791, 793 (Utah 1988). If the relevant state statute does not permit jurisdiction, then the inquiry is ended; if it does, then the question is whether the statute's reach comports with due process. Bradford, 763 P.2d at 793 (quoting 2 James W. Moore, Moore's Federal Practice p 4.41-1, at 4-335 to -336 (2d ed. 1988)).

The relevant provision of the Utah long-arm statute provides for personal jurisdiction over nonresidents as follows:

Any person ... whether or not a citizen or resident of this state, who in person or through an agent does any of the following of the enumerated acts, submits himself [or herself] ... to the jurisdiction of the courts of this state as to any claim arising from:

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

. . . . .

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

Utah Code Ann. § 78-27-24. We assume that either subparagraph (1) or (3) of the long-arm statute will be satisfied if Utah's exercise of specific personal jurisdiction over Industrial satisfies due process. See Parry, 779 P.2d at 661; Bradford, 763 P.2d at 793; cf. Synergetics v. Marathon Ranching Co., 701 P.2d 1106, 1110 (Utah 1985). Consequently, we proceed to the due process issue.

To exercise jurisdiction consistent with due process, the nonresident defendant must have "minimum contacts with the forum state such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citation omitted) (quoted in Parry, 779 P.2d at 662; Synergetics, 701 P.2d at 1110). These "minimum contacts" must be the basis for the plaintiff's claim. The minimum contacts inquiry focuses on "the relationship of the defendant, the forum, and the litigation to each other." Parry, 779 P.2d at 662; Synergetics, 701 P.2d at 1110; Mallory Eng'g v. Ted R. Brown & Assoc., 618 P.2d 1004, 1007 (Utah) (citing International Shoe, 326 U.S. at 317, 66 S.Ct. at 158-59), cert. denied sub nom. Valad Elec. Heating Corp. v. Ted R. Brown & Assoc., 449 U.S. 1029, 101 S.Ct. 602, 66 L.Ed.2d 492 (1980). The United States Supreme Court has suggested two modes of analyzing the question of whether minimum contacts are present: the "arising out of" test and the "stream of commerce" test. See generally Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 108-13, 107 S.Ct. 1026, 1030-33, 94 L.Ed.2d 92 (1987) (opinion of O'Connor, J.); id. at 116-21, 107 S.Ct. at 1034-37 (opinion of Brennan, J.); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295-98, 100 S.Ct. 559, 566-68, 62 L.Ed.2d 490 (1980); Hanson v. Denckla, 357 U.S. 235, 250-54, 78 S.Ct. 1228, 1237-40, 2 L.Ed.2d 1283 (1958); International Shoe, 326 U.S. at 319, 66 S.Ct. at 159-60. Arguello contends that one or both of these tests are satisfied. We first address the "arising out of" theory.

The "arising out of" principle is evidenced in Synergetics, 701 P.2d 1106, and Roskelley, 610 P.2d 1307. In Synergetics, the defendant's sole contact with Utah was the signing of a fraudulent contract within the state's boundaries. Because the claim against the defendant arose out of the contract, we held that specific personal jurisdiction existed. 701 P.2d at 1110-11. In contrast, in Roskelley we held it improper to exercise jurisdiction over a Kentucky corporation that had sold equipment in Utah and then entered the state to oversee the installation of that equipment. We relied on the fact that the claim asserted in Utah against the company was unrelated to those contacts. 610 P.2d at 1309. These cases...