KSTP-FM v. SPECIALIZED COMMUNICATIONS

• Decision Date: 14 December 1999
• Docket Number: No. C7-99-770.,C7-99-770.
• Citation: 602 N.W.2d 919
• Parties: KSTP-FM, LLC, Appellant, v. SPECIALIZED COMMUNICATIONS, INC., Defendant, Adtronics Signs, Ltd., Respondent.
• Court: Minnesota Court of Appeals

602 N.W.2d 919

KSTP-FM, LLC, Appellant, v. SPECIALIZED COMMUNICATIONS, INC., Defendant, Adtronics Signs, Ltd., Respondent.

No. C7-99-770.

Court of Appeals of Minnesota.

December 14, 1999.

Creighton R. Magid, Kristin S. Westgard, Dorsey & Whitney LLP, Minneapolis, for appellant.

Duane W. Krohnke, Eunice P. de Carvalho, Faegre & Benson LLP, Minneapolis, for respondent Adtronics Signs.

Considered and decided by KALITOWSKI, Presiding Judge, WILLIS, Judge, and EDWARD D. MULALLY,¹ Judge.

OPINION

KALITOWSKI, Judge.

Appellant KSTP-FM, LLC (KSTP) challenges the district court's order granting respondent Adtronics's motion to dismiss for lack of personal jurisdiction. KSTP argues the district court erred in determining Adtronics had insufficient minimum contacts with Minnesota to satisfy due process requirements.

FACTS

Appellant KSTP-FM, LLC (KSTP) is a Delaware limited liability company with its principal place of business in St. Paul, Minnesota. KSTP owns and operates a radio station in the Twin Cities known as "KSTP-FM" and "KS95." Respondent Adtronics Signs, Ltd. (Adtronics) is a Canadian corporation with its principal place of business in Delta, British Columbia, Canada. Specialized Communications, Inc., (Specialized) is a Washington corporation with its principal place of business in Bellevue, Washington.

In March 1995, KSTP and Specialized entered into an agreement for KSTP's lease and eventual purchase of two radiolinked electronic billboard message systems, known as Musicboard systems. The billboards were supposed to be capable of reading messages encoded in KSTP's radio signal and then displaying the decoded messages on an electronic display area on the billboard's face. The messages were to consist of the artist and song title of each song as it was broadcast by KSTP.

In April 1995, Specialized placed an order with Adtronics to manufacture the billboards and remote control systems. At the time it placed the order, Specialized told Adtronics that it would provide a shipping destination at a later date. Sometime thereafter, Specialized directed Adtronics to ship the equipment directly to KSTP's sign installer in Minneapolis. In the meantime, KSTP and Specialized modified their original rental agreement to reflect KSTP's outright purchase of the billboard systems. Adtronics shipped the equipment to Minnesota in July and August 1995, and billed Specialized directly for the price of the equipment and the shipping charges.

KSTP was not satisfied with the performance of the billboards. After the first billboard failed to operate properly, KSTP contends that Adtronics either hired or sent a technician to Minnesota to attempt to repair it.² At Specialized's request, sometime in early August 1995, Adtronics hand-delivered a replacement central-processing unit to Specialized in Washington, which Specialized then forwarded to KSTP. KSTP also hired an independent consultant to examine the billboards. At the request of KSTP's attorney, Adtronics forwarded schematics of the billboards directly to KSTP for the consultant's use.

The billboards never became fully operational, and KSTP filed suit against Specialized and Adtronics for breach of the implied warranties of merchantability and fitness for a particular purpose. Specialized moved to dismiss on the basis that any dispute between KSTP and Specialized was subject to the arbitration clause in the original contract. Adtronics moved for dismissal for lack of personal jurisdiction and for failure to state a claim upon which relief could be granted.

In its judgment of April 6, 1999, the district court ordered KSTP and Specialized to submit to binding arbitration in Washington, pursuant to the terms of their original agreement. The district court dismissed KSTP's complaint against Adtronics on the basis that it lacked personal jurisdiction over Adtronics. The district court also held that, even if Minnesota had personal jurisdiction over Adtronics, KSTP's complaint would merit dismissal because the United Nations Convention on Contracts for the Sale of International Goods (CISG) applies to the contract between Specialized and Adtronics, and the CISG confers no rights on KSTP as a third-party beneficiary. KSTP filed its notice of appeal on May 5, 1999. This court dismissed KSTP's appeal of the district court's order for arbitration as premature, but allowed the appeal on the jurisdiction issue to proceed.

ISSUE

Did the district court err in concluding that Adtronics lacked sufficient contacts with Minnesota to justify the exercise of personal jurisdiction?

ANALYSIS

The existence of jurisdiction is a question of law, which this court reviews de novo. Stanek v. A.P.I., Inc., 474 N.W.2d 829, 832 (Minn.App.1991),review denied (Minn. Oct. 31, 1991). Upon review of a pretrial order dismissing for lack of personal jurisdiction, plaintiff's allegations and evidence supporting jurisdiction must generally be taken as true. Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290, 293, 240 N.W.2d 814, 816 (Minn.1976); TRWL Fin. Establishment v. Select Int'l, Inc., 527 N.W.2d 573, 575 (Minn.App.1995). When a defendant challenges personal jurisdiction, the plaintiff has the burden of presenting a prima facie case demonstrating sufficient minimum contacts. Does 1-22 v. Roman Catholic Bishop, 509 N.W.2d 598, 600 (Minn.App.1993). In doubtful cases, the court should resolve the jurisdictional question in favor of retaining jurisdiction. Hardrives, Inc.,307 Minn. at 296,240 N.W.2d at 818.

A court may exercise personal jurisdiction over a nonresident defendant if the requirements of Minnesota's long-arm statute are met and there are sufficient minimum contacts to satisfy constitutional due process requirements. Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 29 (Minn.1995); Jenson v. R.L.K. & Co., 534 N.W.2d 719, 722 (Minn.App.1995), review denied (Minn. Sept. 20, 1995). The parties do not dispute that Minnesota's long-arm statute provides for jurisdiction over Adtronics. Thus, the only question is whether the district court correctly concluded that Adtronics had insufficient minimum contacts with Minnesota to satisfy due-process requirements.

Due process requires that before a court can extend personal jurisdiction, minimum contacts must exist between a nonresident defendant and the state in order to satisfy "traditional notions of fair play and substantial justice." Domtar, 533 N.W.2d at 29 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945)). To meet this burden, a plaintiff must show sufficient contacts in the complaint and supporting evidence, which are to be viewed as true for purposes of this analysis. V.H. v. Estate of Birnbaum, 529 N.W.2d 462, 466 (Minn.App.1995), aff'd by 543 N.W.2d 649 (Minn.1996).

Minnesota uses a five-factor test to assess the fairness of exercising personal jurisdiction over a nonresident defendant: (1) quantity of contacts with the forum state; (2) quality and nature of contacts; (3) connection between the cause of action and the contacts; (4) the state's interest in providing a forum; and (5) convenience to the parties. Marquette Nat'l Bank v. Norris, 270 N.W.2d 290, 295 (Minn.1978). The first three factors are of primary concern, while the last two merit less consideration. TRWL Financial, 527 N.W.2d at 576 (citing Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 907 (Minn.1983)). The purpose of examining these five factors is to determine whether nonresidents have "purposefully availed" themselves of the protection and benefits of Minnesota law. Dent-Air, Inc., 332 N.W.2d at 907.

The law distinguishes between two types of personal jurisdiction, specific and general. Domtar, Inc., 533 N.W.2d at 30. General personal jurisdiction exists when a nonresident has such substantial contacts with the forum state that the state may exert jurisdiction over the nonresident for any purpose. Id. Specific personal jurisdiction is appropriate where the nonresident's contacts are minimal, but the cause of action arises out of or is related to those contacts. Id.; see also Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn.1992). Even a single, isolated transaction between a nonresident and a forum state may be sufficient to justify the exercise of personal jurisdiction. Marquette Nat'l Bank, 270 N.W.2d at 295.

A nonresident's contacts with the forum state, not with residents of the forum state, determine whether minimal contacts exist. West Am. Ins. Co. v. Westin, Inc., 337 N.W.2d 676, 679 (Minn.1983). Here, Adtronics's contacts with Minnesota are few in number. Adtronics: (1) has never had an office, owned property, or filed taxes in Minnesota; (2) has never had a mailing address or telephone number in Minnesota; and (3) did not negotiate a sales or rental contract directly with KSTP. Adtronics sold two billboards to Specialized in Washington and subsequently shipped those billboards to KSTP in Minnesota. All of Adtronics's subsequent contacts with Minnesota were a result of that transaction.

When, as here, a nonresident has had few contacts with Minnesota, the nature and quality of those contacts become dispositive. Marquette Nat'l Bank, 270 N.W.2d at 295; Maiers Lumber & Supply, Inc. v. Chancey Trailers, 354 N.W.2d 585, 587 (Minn.App.1984). In evaluating the nature and quality of a contact, this court must ascertain whether appellant has purposefully availed itself of the benefits and protection of Minnesota law. Dent-Air, 332 N.W.2d at 907. The question is whether appellant had "fair warning" of being sued in Minnesota. Real Properties, Inc. v. Mission Ins. Co., 427 N.W.2d 665, 668 (Minn.1988) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985)).

Accepting all of KSTP's allegations as true, Adtronics's contacts with Minnesota consisted of: (1) shipping the billboards to KSTP at Specialized's request; (2) either...