Drilling Engineering, Inc. v. Independent Indonesian Am. Petroleum Co.

• Decision Date: 24 September 1973
• Docket Number: No. 53253,53253
• Citation: 283 So.2d 687
• Parties: DRILLING ENGINEERING, INC. v. INDEPENDENT INDONESIAN AMERICAN PETROLEUM COMPANY.
• Court: Louisiana Supreme Court

Page 687

283 So.2d 687

DRILLING ENGINEERING, INC. v. INDEPENDENT INDONESIAN AMERICAN PETROLEUM COMPANY.

No. 53253.

Supreme Court of Louisiana.

Sept. 24, 1973.

Rehearing Denied Oct. 26, 1973.

Warren D. Rush, Bean & Rush, Lafayette, for plaintiff-applicant.

J. J. Davidson, Jr., V. Farley Sonnier, Davidson, Meaux, Onebane & Donohoe; Lafayette, for defendant-respondent.

MARCUS, Justice.

This is a suit by plaintiff against defendant for the balance due on a written contract for engineering services. An exception to the jurisdiction of the court was sustained by the trial judge. The Court of Appeal affirmed.¹ We aranted a writ of review.²

The facts are not in dispute.

Plaintiff, Drilling Engineering, Inc., a Texas corporation qualified to do business in the State of Louisiana, with its principal office in Lafayette, Louisiana, furnishes engineering services to the oil industry. Defendant, Independent Indonesian American Petroleum Company, a corporation organized under the laws of Delaware, with its principal office and place of business in San Francisco, California, is principally engaged in the business of exploration for and production of petroleum products in Indonesia. It is neither qualified to do business in Louisiana nor has appointed an agent for service of process.

Paul C. Smith, Jr., defendant's vice-president in charge of production, contacted David G. Williams, president of plaintiff corporation, by telephone for an appointment for the purpose of contracting with plaintiff for engineering services to be rendered in its operation in Indonesia. The parties met in plaintiff's office in Lafayette for approximately two hours. At this meeting, the parties agreed upon the terms of the contract for the services to be rendered by plaintiff. Pursuant to the terms agreed upon, a letter agreement was prepared by Williams and forwarded to the defendant at its office in San Francisco. Defendant revised the second page of the original proposal relative to workmen's compensation (so as to make the California law applicable) and, after signing same, returned it to plaintiff in Lafayette. Upon receipt, Williams signed it in his Lafayette office.

The agreement generally provided that plaintiff would furnish operational engineers in Indonesia for a period of six months at a charge of $150.00 per day per engineer. It also set forth the method of payment. Pursuant to this contract, plaintiff furnished engineers (residents of Lafayette) who performed services for defendant in Indonesia. A total of four engineers worked on the job.

Additionally, operational and personnel problems were thereafter discussed by long-distance telephone by the representatives of the two corporations over the six-month period of the contract. There was an average of two calls per week during this period. Williams also testified that he was requested to review the job progress and made drilling studies based upon information, some of which was furnished from defendant's office. Plaintiff also gave recommendation on how to correct certain operational problems which defendant was having in Indonesia. Invoicing was done in Lafayette, and the checks for payment were forwarded from San Francisco. There was also testimony that defendant corporation corresponded with plaintiff corporation on several occasions.

Pursuant to said contract, plaintiff performed engineering services for defendant in Indonesia and invoiced defendant in the amount of $20,401.28. After applying credits for payment received, there remains an alleged balance due of $5,400.00, which represents the amount sued upon herein.

It is plaintiff's position that, as a result of defendant's transacting business in this state, it is subject to the personal jurisdiction of our courts as to a cause of action arising from said activity under R.S. 13:3201(a). Defendant, on the other hand, contends that the single transaction involved in this case is not sufficient to apply the provisions of the 'long-arm' statute without offending 'the traditional notions of fair play and substantial justice' citing International Shoe Company v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and McGee v. International Life Insurance Company, 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957).

R.S. 13:3201 in pertinent part provides:

'A court may exercise personal jurisdiction over a nonresident, who acts directly or by an agent, as to a cause of action arising from the nonresident's

'(a) transacting any business in this state;

'(b) contracting to supply services or things in this state;

The provision in our statute, enacted in 1964, is an adaptation of Section 1.03(a) of the Uniform Interstate and International Procedure Act.³ It was the intention of the Louisiana Legislature in its enactment of R.S. 13:3201 to extend the personal jurisdiction of Louisiana courts over nonresidents to the full limits of due process under the Fourteenth Amendment.⁴

Comment (d) of the Louisiana State Law Institute which appears beneath the statute explains the broad scope intended to be given to 'transacting any business.'

'(d) 'Transacting business,' as used in Subdivision (a), is a term which is much broader than 'doing business' as defined by earlier Louisiana cases, and the phrase 'does * * * business' of Subdivision (d) conferring personal jurisdiction over a nonresident on a cause of action arising ex delicto or quasi ex delicto. It is intended to mean a single transaction of either interstate or intrastate business, and to be as broad as the phrase 'engaged in a business activity' of R.S. 13:3471(1).'

It is conceded by the parties to this litigation that sub-section (b) of our 'long-arm' statute does not apply to the facts of this case. All agree that, if there is jurisdiction in this case, it would be under the 'transacting any business in this state' provision as contained in sub-section (a) of the statute.

The major argument against allowance of jurisdiction in personam on the basis of the transaction of any business is that it would be a denial of due process. The standards for meeting this constitutional requirement were set forth in International Shoe Company v. State of Washington, supra, in which it was held that: 'Due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice. '' Later, in McGee v. International Life Insurance Company, ...