Mecham v. Consolidated Oil & Transp., Inc.

• Decision Date: 26 July 2002
• Docket Number: No. 20010041-CA.,20010041-CA.
• Citation: 2002 UT App 251,53 P.3d 479
• Court: Utah Court of Appeals
• Parties: Joseph MECHAM, Plaintiff and Appellant, v. CONSOLIDATED OIL & TRANSPORTATION, INC., a Colorado corporation; and Chase Manhattan Bank, a New York corporation, Defendants and Appellees.

53 P.3d 479

2002 UT App 251

Joseph MECHAM, Plaintiff and Appellant, v. CONSOLIDATED OIL & TRANSPORTATION, INC., a Colorado corporation; and Chase Manhattan Bank, a New York corporation, Defendants and Appellees.

No. 20010041-CA.

Court of Appeals of Utah.

July 26, 2002.

Wayne A. Freestone, Parker, Freestone & Angerhofer, PC, Sandy, for Appellant.

Clark B. Allred and Clark A. McClellan, McKeachnie, Allred, McClellan & Trotter, Roosevelt, and Barbara L. Maw, Salt Lake City, for Appellees.

Before Judges JACKSON, P.J., BILLINGS, Associate P.J., and BENCH, J.

OPINION

JACKSON, Presiding Judge:

INTRODUCTION

¶ 1 Appellant Joseph Mecham (Mecham) appeals the district court's grant of summary judgment to Chase Manhattan Bank (Chase), a lender and secured creditor of Landmark Petroleum, Inc. (Borrower). He also appeals the district court's Order that dismissed his claims against a Colorado corporation, Consolidated Oil & Transportation, Inc. (Consolidated), whom Mecham alleges was the owner, co-owner, operator or co-operator of equipment or property on which he was injured.

¶ 2 Judges Jackson and Billings affirm the district court's grant of summary judgment in favor of Chase. We unanimously affirm the conclusion that the district court could not exercise general jurisdiction over Consolidated. Judges Billings and Bench reverse the district court's conclusion that it could not exercise specific jurisdiction over Consolidated, with Judge Jackson dissenting in section II(B) of the main opinion.

BACKGROUND

¶ 3 In 1994 and 1995, Mecham was employed by Adler Hot Oil Service (Adler) as a hot oil truck driver. In September of 1994 and February of 1995, Shirley Hebert, on behalf of Consolidated, telephoned Adler, contracting on each occasion with Adler for the performance of hot oil services.¹ Mecham was injured while performing the February contract. He brought a suit for, inter alia, negligence against Consolidated and Borrower. Mecham describes both companies as owners, co-owners, operators, or co-operators "of certain portions of land[,] petroleum products[, or] storage tanks on which the incident causing [Mecham's] injuries occurred." He also sued Chase, a secured creditor of Borrower, alleging that Chase exercised sufficient control over Borrower as to be considered its principal, and was thus responsible for Borrower's actions.

¶ 4 In 1994, Chase and Borrower agreed that the refinery where Mecham was injured should be closed, and that Borrower's assets would either be sold or maintained for later disposal. They also agreed to the use of two bank accounts—one for the proceeds of the sale of assets, and one to serve as an expense account for the sale and maintenance of Borrower's assets. Chase had exclusive access to the sales proceeds account. Chase insisted that the plant manager, Richard Means, an employee of the refinery, continue to be employed at the refinery to maintain the assets pending their disposal. He was to be paid out of the expense account.

¶ 5 Also, Chase was required to be informed of any sale greater than $250,000 and had the right to object to that sale. If Chase objected, Chase's accounting department would resolve the dispute. In addition, Borrower was required to have monthly meetings with Chase to discuss projected expenses. Chase had the power to approve or disapprove of expenses greater than $2,500. If a disagreement arose, then the average of the previous two months' expenses was used.

¶ 6 The district court granted summary judgment to Chase, concluding that Chase was not a principal of Borrower. It also granted Consolidated's motion to dismiss, concluding that it could exercise neither general nor specific personal jurisdiction over Consolidated. Mecham appeals both the grant of summary judgment and the grant of Consolidated's motion to dismiss.

ISSUES AND STANDARDS OF REVIEW

¶ 7 Mecham first appeals the district court's grant of summary judgment to Chase pursuant to Rule 56 of the Utah Rules of Civil Procedure. "Summary judgment is appropriate only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law." Jones v. ERA Brokers Consol., 2000 UT 61,-¶ 8, 6 P.3d 1129; see also Utah R. Civ. P. 56(c). "Because entitlement to summary judgment is a question of law, we accord no deference to the trial court's resolution of the legal issues presented." K & T, Inc. v. Koroulis, 888 P.2d 623, 627 (Utah 1994). "`"We determine only whether the trial court erred in applying the governing law and whether the trial court correctly held that there were no disputed issues of material fact."'" Berenda v. Langford, 914 P.2d 45, 50 (Utah 1996) (citations omitted).

¶ 8 Mecham challenges the district court's determination that no agency relationship existed between Chase and Borrower. He argues that "the trial court err[ed] in finding that there was no genuine issue of material fact as to whether [Chase] was a principal/agent of [Borrower] and that [Chase] was entitled to judgment as a matter of law." Other than this ultimate determination regarding the existence of an agency relationship, Mecham does not allege that any issues of material fact are in dispute. Normally "the question of whether an agency relationship exists is one of fact, which we review for an abuse of discretion." Valcarce v. Fitzgerald, 961 P.2d 305, 314 (Utah 1998). However, "[w]here the evidence as to the agent's authority is undisputed, or different reasonable logical inferences may not be drawn therefrom, [this] question is one of law." 3 Am.Jur.2d Agency § 373, at 891-92 (2000). The underlying evidence as to whether Borrower was Chase's agent is undisputed. Thus, the district court's determination that no agency relationship existed is a legal conclusion, which we review for correctness. See id. Accordingly, because Mecham disputes no issues of material fact, we conclude that the district court "correctly held that there were no disputed issues of material fact," and "[w]e determine only whether the trial court erred in applying the governing law" to its agency determination. Berenda, 914 P.2d at 50 (quotations and citations omitted).

¶ 9 Next, Mecham appeals the district court's Order, which dismissed his claims against Consolidated. Mecham challenges the district court's conclusions that it could exercise neither general nor specific personal jurisdiction over Consolidated. Because the "pretrial jurisdictional decision [was] made on documentary evidence only, [this] appeal from that decision presents only legal questions that are reviewed for correctness." Arguello v. Indus. Woodworking Mach. Co., 838 P.2d 1120, 1121 (Utah 1992).

ANALYSIS

I. Appeal of Summary Judgment to Chase

¶ 10 In his memorandum in opposition to Chase's Motion for Summary Judgment, and on appeal, Mecham cites section 14(O) of the Restatement (Second) of Agency to support his theory that Chase became Borrower's principal, and is thus liable for Borrower's negligent acts. This section of the Restatement provides, "A creditor who assumes control of his debtor's business for the mutual benefit of himself and his debtor, may become a principal, with liability for the acts and transactions of the debtor in connection with the business." Id.² Because a secured creditor may become its debtor's principal "either in person or through an agent," under this section, Restatement (Second) of Agency § 14(O) cmt. a, Mecham argued below that Chase became Borrower's principal both in person and through Means, whom Mecham alleges is Chase's agent. He thus argued that Chase is responsible for his injuries, which he alleges are the result of Borrower's negligence.

¶ 11 However, the district court rejected Mecham's agency argument, concluding that no agency relationship existed between Chase and Borrower because (1) Means was not Chase's agent, so "having Means on-site to oversee the sale did not establish an agency relationship unless Chase exercised some actual control," which it "did not," and (2) it "did not find anything unusual about Chase's position [as a lender or secured creditor]," and "that the actions of Chase were appropriate and did not exceed its position as lienholder." It further reasoned that there were "no allegation[s] or evidence that Chase took part in any management of the company or had any input as to how the sale of assets was performed." Mecham challenges both conclusions.

A. Chase's Relationship with Means

¶ 12 Because we affirm the district court's conclusion that Means was not Chase's agent, we need not address Mecham's argument under Restatement (Second) of Agency § 14(O), that Chase's relationship with Means created an agency relationship between Chase and Borrower.

¶ 13 In support of his argument that Means became Chase's agent, Mecham correctly asserts that "[a]gency is `the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.'" Wardley Corp. v. Welsh, 962 P.2d 86, 89 (Utah Ct.App.1998) (citation omitted). However,

for [Mecham] to show [Means] was [Chase's] agent, he must [thus] prove that (1) [Chase] manifested that [Means] could act for [it], (2) [Means] accepted the proposed undertaking, and (3) both [Chase] and [Means] understood that [Chase] was to be in charge of the undertaking. In other words, "an agency is created and authority is actually conferred very much as a contract is made": a meeting of the minds must exist between the parties. Moreover, and critical in this case, "[a]n agency relationship can arise only at the will and by the act of the principal."

Id. (last alteration in original) (citations omitted). As a result, "[t]hese principles doom [Mecham's] arguments." Id. To meet his burden, Mecham alleges only that (1) Chase insisted that Means remain employed at the refinery to manage the maintenance of Borrower's assets,...