Carlson Corp. v. University of Vermont

• Decision Date: 06 March 1980
• Citation: 380 Mass. 102,402 N.E.2d 483
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: The CARLSON CORPORATION v. UNIVERSITY OF VERMONT.

Page 483

402 N.E.2d 483

380 Mass. 102

The CARLSON CORPORATION v. UNIVERSITY OF VERMONT.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Nov. 7, 1979.

Decided March 6, 1980.

William G. Meserve, Boston, for defendant.

James J. Barrett, Boston, for plaintiff.

Before HENNESSEY, C. J., and QUIRICO, KAPLAN, WILKINS and ABRAMS, JJ.

ABRAMS, Justice.

In this action for breach of contract we are asked to determine whether a Massachusetts corporation may sue the University of Vermont (university) in a Massachusetts court. In February, 1978, the Carlson Corporation (Carlson) sued the university in Suffolk Superior Court for the balance due under the contract. The university was served by certified mail pursuant to the Massachusetts long arm statute, G.L. c. 223A, § 6, and moved to dismiss pursuant to Mass.R.Civ.P. 12(b)(2), 365 Mass. 754 (1974), for lack of personal jurisdiction. The motion was denied. Pursuant to the university's request, the judge of the Superior Court agreed to report his interlocutory order to the Appeals Court for review under the provisions of G.L. c. 231, § 111, and Mass.R.Civ.P. 64, 365 Mass. 831 (1974). We granted the university's request for direct appellate review. We affirm.

The university's basic contention is that it had insufficient contacts with Massachusetts to be "transacting any business in this commonwealth" within the meaning of the long arm statute, ¹ and within the constitutional limits on the exercise of personal jurisdiction by a State over a nonresident. The parties have agreed that the jurisdictional question is to be decided solely on the basis of the facts set forth in the affidavits. ² We summarize the affidavits.

The plaintiff is a Massachusetts corporation with its principal and usual place of business in Cochituate, Massachusetts. The defendant is a Vermont corporation created by a special act of the Vermont Legislature, ³ which has its main campus and principal place of business in Burlington, Vermont. Although it owns property and offers courses elsewhere in Vermont, the university has no campuses, owns no real estate and has no offices or other places of business in Massachusetts.

In the early 1970's, the university planned to build a Living and Learning Center in Burlington, Vermont. At no time did the university publish any advertisements or invitations to bid in any Massachusetts newspaper or publication. Rather, early in 1971, Carlson initiated negotiations seeking the contract award. These negotiations consisted of two phone calls from Carlson to a university official, with follow-up letters to which the university replied. In June, 1971, Carlson hand-delivered the required prequalification documents to the same university official in Burlington, Vermont, and in September, 1971, Carlson submitted a final design/build proposal.

A special review panel in Burlington, created especially to choose a proposal, selected the Carlson proposal. The contract between the university and Carlson for the design and construction of the Living and Learning Center was executed on January 5, 1972, in Boston, Massachusetts. The university official stated that the construction contract and related financing papers were signed in Boston "to accommodate officials of the U.S. Department of Housing and Urban Development and the Office of Education of the Department of Health, Education and Welfare, who were providing interest and subsidies in connection with the financing of this Project . . . ."

Construction of the project took place in Burlington, Vermont, and formal and informal job meetings were held virtually every day at the site. The building construction supervisor stated that he never dealt with Carlson representatives in Massachusetts. ⁴ Carlson mailed invoices for the work performed on the project to the university at Burlington; all payments under the contract were made by check mailed to Carlson from Burlington, Vermont.

In testing a claim of personal jurisdiction over a nonresident defendant, we must first determine whether the defendant's conduct comes within the literal terms of G.L. c. 223A. Only then do we consider whether the exercise of jurisdiction in the particular case would be consistent with basic requirements of due process mandated by the United States Constitution. Good Hope Indus., Inc. v. Ryder Scott Co., --- Mass. ---, --- ^a, 389 N.E.2d 76 (1979). There can be no doubt that physically signing a contract in Massachusetts is, in literal terms, transacting business in Massachusetts, if the cause of action arises from that contract. The more difficult inquiry in this case is determining "whether there was some minimum contact with the Commonwealth which resulted from an affirmative, intentional act of the defendant, such that it is fair and reasonable to require the defendant to come into the State to defend the action." Id. at --- ^b, 389 N.E.2d at 80. The determination whether personal jurisdiction can properly be asserted by the courts of the forum State is "one in which few answers will be written 'in black and white. The greys are dominant and even among them the shades are innumberable.' " Kulko v. Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690, 1697, 56 L.Ed.2d 132 (1978), citing Estin v. Estin, 334 U.S. 541, 545, 68 S.Ct. 1213, 1216, 92 L.Ed. 1561 (1948). Each case must turn on its own facts. Droukas v. Divers Training Academy, Inc., --- Mass. ---, --- ^c, 376 N.E.2d 548 (1978).

In the instant case, the contract signing ceremony, which took place in Massachusetts, was the culmination of months of negotiations. The ceremony was an essential and critical stage of the business relation between the parties. Whatever the university's reasons for scheduling the contract signing ceremony in Boston, the defendant's physical presence in Massachusetts to execute the contract was a deliberate action and is properly characterized as "an affirmative, intentional act of the defendant." See Good Hope Indus., Inc. v. Ryder Scott Co., supra, --- Mass. at --- ^d, 389 N.E.2d at 80; Vencedor Mfg. Co. v. Gougler Indus., Inc., 557 F.2d 886, 892 (1st Cir. 1977). Compare Kaye-Martin v. Brooks, 267 F.2d 394 (7th Cir. 1959); Restatement (Second) of Conflict of Laws, § 36, at 150-151 (1971). "(W)here a contract is made in this state and a cause of action arises out of such contract, the consummation of the contract in (the forum State) constitutes the transaction of business or the minimum contacts necessary to invoke personal jurisdiction." Iroquois Gas Corp. v. Collins, 42 Misc.2d 632, 634-635, 248 N.Y.S.2d 494, 497 (N.Y.Sup.Ct.1964). Accord, Patrick Ellam, Inc. v. Nieves, 41 Misc.2d 186, 245 N.Y.S.2d 545 (N.Y.Sup.Ct.1963). ⁵ See O'Brien v. Lanpar Co., 399 S.W.2d 340 (Tex.1966); Kropp Forge Co. v. Jawitz, 37 Ill.App.2d 475, 186 N.E.2d 76 (1962) (but see Baughman Mfg. Co. v. Hein Equipment Co., 44 Ill.App.2d 373, 194 N.E.2d 664 (1963)); Currie, The Growth of the Long Arm: Eight Years of Extended Jurisdiction in Illinois, 1963 U.Ill.L. Forum 533, 563-566. ⁶

In McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), the Supreme Court upheld California's assertion of personal jurisdiction over a nonresident defendant based on a single contract "which had substantial connection with that State." Id. at 223, 78 S.Ct. at 201. ⁷ Similarly, the contract in this case also has a substantial connection with this State, based on the amount of time and money involved. ⁸ See Manufacturers Lease Plans, Inc. v. Alverson Draughon College, 115 Ariz. 358, 364, 565 P.2d 864 (1977).

Where the nonresident defendant's contacts with Massachusetts had substantial commercial consequences in this State, personal jurisdiction was found, notwithstanding the absence of actual physical presence in Massachusetts. Good Hope Indus., Inc. v. Ryder Scott Co., --- Mass. ---, ---. ^{e 9} 389 N.E.2d 76 (1979). Cf. Droukas v. Divers Training Academy, Inc., --- Mass. ---, --- ^f, 376 N.E.2d 548 (1978); "Automatic" Sprinkler Corp. v. Seneca Foods Corp., 361 Mass. 441, 446, 280 N.E.2d 423 (1972). See Nichols Assocs. v. Starr, 4 Mass.App. 91, 341 N.E.2d 909 (1976).

We emphasize, however, that the amount of money in dispute on a contractual claim is not the sole factor in determining a nonresident defendant's amenability to suit in the courts of the Commonwealth under G.L. c. 223A, § 3. Compare McGee v. International Life Ins. Co., supra (individual consumer). See also Currie, The Growth of the Long Arm, supra at 549. Here, the nature of the contract must be viewed in conjunction with other aspects of the dealings between the parties, most notably, the defendant's physical presence in this State at a formal contract signing, attended by a number of persons other than the immediate parties.

The interests of the forum State are a relevant factor in determining questions of jurisdiction. World-Wide Volkswagen Corp. v. Woodson, --- U.S. ----, ----, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980). In this case, the university engaged in a commercial transaction over a prolonged period of time with a Massachusetts corporation pursuant to a written contract signed in this State. In these circumstances, Massachusetts has an interest not only in providing a forum for its residents, but also in enforcing business transactions consummated within its boundaries. See Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 498 n.27 (5th Cir. 1974); Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 385 (6th Cir. 1968); Aftanase v. Economy Baler Co., 343 F.2d 187, 197 (8th Cir. 1965); Currie, The Growth of the Long Arm: Eight Years of Extended Jurisdiction in Illinois, 1963 U.Ill.L.Forum, 533, 565. We think "(f)ailure to honor a contractual obligation incurred in a state cannot reasonably be said to be without consequences there. The effects of such a breach of contract on the general conduct of business may not be readily quantifiable, but they are, nonetheless, real." Davis H....