Jason Pharmaceuticals, Inc. v. Jianas Bros. Packaging Co., Inc.

• Decision Date: 01 September 1992
• Docket Number: No. 383,383
• Parties: JASON PHARMACEUTICALS, INC. v. JIANAS BROTHERS PACKAGING CO., INC. ,
• Court: Court of Special Appeals of Maryland

Page 425

94 Md.App. 425

617 A.2d 1125

JASON PHARMACEUTICALS, INC. v. JIANAS BROTHERS PACKAGING CO., INC.

No. 383, Sept. Term, 1992.

Court of Special Appeals of Maryland.

Jan. 7, 1993.

John H. Zink, III (Mary-Dulany James and Venable, Baetjer and Howard, on the brief), Towson, for appellant

E. David Hoskins (James E. Gray and Goodell, DeVries, Leech & Gray, on the brief), Baltimore, for appellee.

Argued Before ROSALYN B. BELL, FISCHER and HARRELL, JJ.

ROSALYN B. BELL, Judge.

On April 30, 1991, appellant, Jason Pharmaceuticals, Inc. (Jason), a Maryland corporation, filed suit in the Circuit Court for Baltimore County against appellee, Jianas Brothers Packaging Co., Inc. (Jianas), a Missouri corporation, alleging breach of contract and negligent misrepresentation. After an evidentiary hearing on January 24, 1992, the trial court granted Jianas's motion to dismiss for lack of personal jurisdiction. On appeal, Jason contends that the trial court erred in finding that Maryland has no personal jurisdiction over Jianas. We agree with Jason that Jianas is subject to personal jurisdiction in Maryland and reverse.

THE FACTS

The contract underlying Jason's suit was for the sale of two packaging machines by Jason to Jianas. Steve Jianas, vice president of Jianas, signed a proposal, written by Jason, to purchase the machines. R.A. Jones & Co., Inc., a third party, was to test the machines and sign as a warrantor if the machines passed the test. The proposal included a sale price of $700,000, and a $35,000 down payment, which was to be "promptly refunded in full if the testing of the machines is unsuccessful." Jianas sent the $35,000 to Jason in Maryland, and when Jianas claimed that the testing was unsuccessful and refused to go through with the deal, Jason brought the suit for breach of contract and negligent misrepresentation.

Jianas first learned that the machines were for sale when Mr. Jianas met representatives of R.A. Jones at a trade show in Chicago. One of those representatives gave Mr. Jianas a brochure containing a description of the machines, and a telephone number for Jason in Maryland.

After receiving the brochure, Mr. Jianas testified at the evidentiary hearing that "I think it was the next week or so, whenever I returned home, I called Jason Pharmaceuticals ¹ and contacted Jim Janson." Mr. Janson is a project engineer at Jason who was involved in selling the machines. Between November of 1990 and January of 1991, the parties engaged in extensive negotiations concerning various terms of the sale, including price. Over 40 phone calls were made, and at least half of the calls were made by Jianas in Missouri to Jason in Maryland.

After negotiations broke down, Susan Boone, the chief operating officer at Jason, stepped in, and Mr. Jianas signed the proposal on January 25, 1991. The proposal stated that "Jianas will indicate its acceptance of this offer by countersigning one of the enclosed copies of this letter and returning it to Jason." Mr. Jianas signed the letter and sent it to Jason in Maryland along with a check for $35,000 ², which Jason deposited in a Maryland bank. The machines were stored in Ohio. Tests were performed on a prototype machine located at R.A. Jones's plant in Kentucky. Jianas alleged that the tests were unsuccessful. R.A. Jones refused to sign the warranty as it appeared in the proposal, but signed a modification of the warranty on February 27, 1991.

PERSONAL JURISDICTION

--The Long Arm Statute--

Appellant contends that the circuit court erred in finding that there was no personal jurisdiction over appellee. We agree and reverse the decision of the circuit court.

General jurisdiction exists where a party has been "doing business" generally in the forum state, but the cause of action is not related to those contacts. Camelback Ski Corp. v. Behning, 312 Md. 330, 338, 539 A.2d 1107, cert. denied, 488 U.S. 849, 109 S.Ct. 130, 102 L.Ed.2d 103 (1988). Specific jurisdiction exists where the cause of action arises out of a party's contacts with the forum state. Camelback, 312 Md. at 338, 539 A.2d 1107. This case involves specific jurisdiction arising out of a contractual dispute.

The Maryland Long Arm Statute, Md.Cts. & Jud.Proc.Code Ann. § 6-103 (1974, 1989 Repl.Vol.), provides, in pertinent part:

"(b) In general.--A court may exercise personal jurisdiction over a person, who directly or by an agent:

"(1) Transacts any business or performs any character of work or service in the State; [or]

* * * * * *

"(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State."

Once personal jurisdiction is established under the long arm statute, the court must then determine whether the exercise of personal jurisdiction is consistent with the Due Process Clause of the Fourteenth Amendment. Mohamed v. Michael, 279 Md. 653, 657, 370 A.2d 551 (1977).

To establish personal jurisdiction under § 6-103(b)(1), appellant has the burden of showing that appellee transacted business in Maryland. McKown v. Criser's Sales & Service, 48 Md.App. 739, 747, 430 A.2d 91, cert. denied, 290 Md. 718 (1981). The phrase "transacting any business" has been the subject of Maryland cases, but none of those cases share the same factual circumstances as the instant case. See Mohamed, 79 Md. at 658-59, 370 A.2d 551 (weeks of negotiating in Maryland to settle a contractual dispute held transacting business); Harris v. Arlen Properties, Inc., 256 Md. 185, 196-97, 260 A.2d 22 (1969) (where developer of shopping center who visited Maryland four times to view a potential site for shopping center and filed for a building permit in Maryland, the Court had "no difficulty in determining that these actions were purposeful actions which constituted 'transacting of business' "); Novack v. National Hot Rod Ass'n, 247 Md. 350, 357, 231 A.2d 22 (1967) (inspecting and certifying a racetrack in Maryland is transacting business); Van Wagenberg v. Van Wagenberg, 241 Md. 154, 166-67, 215 A.2d 812 cert. denied, 385 U.S. 833, 87 S.Ct. 73, 17 L.Ed.2d 68 (1966) (settlement agreement requiring husband to make continuing payments in New York on behalf of his ex-wife and their child held to be transacting business within the meaning of the New York long arm statute because contract was formed in New York and payments were to be made in New York); Sleph v. Radtke, 76 Md.App. 418, 427, 545 A.2d 111, cert. denied, 314 Md. 193, 550 A.2d 381 (1988) (residents of Virginia who executed mortgage for property located in Maryland held to have transacted business).

Appellee argues that it did not transact business in Maryland and that "the instant case involves an unsuccessful ³ effort to enter into a one-time sales transaction." Likewise, the trial court, in granting the motion to dismiss, was under the impression that, where a one-transaction contract is involved, there can be no assertion of personal jurisdiction: "on a one contract deal, the fact that there are phone calls and the fact that there is mail between the States, that isn't going to do it ... because I don't think that is the law." The trial judge then asked, "Well, in that case then, anybody who makes a contract with a Maryland business or person or corporation is automatically going to be sued in Maryland?"

The trial judge, at the evidentiary hearing, asked appellant's attorney, "Now, why in the world would that scenario of facts in any way ever suggest to [appellee] that [it was] utilizing Maryland and [was] subject to Maryland jurisdiction?" The trial court further stated that "those transactions, alone, of using the phone, standing alone, and mailing a check, is insufficient evidence of transacting business in this state also."

We believe the trial court erred in deciding that, under the facts and circumstances in the instant case, a one-transaction contract with a Maryland corporation is not transacting business within the meaning of § 6-103(b)(1). Therefore, we need not consider appellant's alternative contention that there is personal jurisdiction over appellee in Maryland under § 6-103(b)(4). ⁴

The trial court also concluded that the contract was formed in Missouri and was persuaded that this was an important factor weighing against the exercise of personal jurisdiction over appellee: "Well, as far as [appellee was] concerned, the contract was negotiated in Missouri.... Well, they never left Missouri. Everything they did was in Missouri...."

The trial court arrived at this conclusion without interpreting the acceptance term in the proposal which stated that acceptance was to be made by signing the proposal "and returning it to [appellant]." The parties have cited us to no cases interpreting this particular language as it relates to whether a contract is formed in the state of the one who returns it or the state of the one who receives it, and our own research has not shed any light on this matter. Since this language was not addressed in the briefs or considered by the trial court, we view the conclusion of the trial judge on where the contract was formed far from controlling in the determination of personal jurisdiction. Certainly, there is sufficient evidence indicating that appellee was transacting business within the meaning of § 6-103(b)(1).

In determining whether a party has transacted business, this Court has stated:

"A nonresident who has never entered the State ... may be deemed to have 'transacted business' in the State within the meaning of subsection (b)(1) as long as his or her actions culminate in 'purposeful activity' within the State."

Sleph, 76 Md.App. at 427, 545 A.2d 111. In addition:

"An absence of physical contacts will not defeat the exercise of personal jurisdiction where a commercial...