Millette v. O'Neal Steel, Inc.

• Decision Date: 13 November 1992
• Citation: 613 So.2d 1225
• Parties: William G. MILLETTE, Ted Millette, and Thomas Millette v. O'NEAL STEEL, INC. 1911163.
• Court: Alabama Supreme Court

Page 1225

613 So.2d 1225

28 A.L.R.5th 885

William G. MILLETTE, Ted Millette, and Thomas Millette v. O'NEAL STEEL, INC.

1911163.

Supreme Court of Alabama.

Nov. 13, 1992.

Rehearing Denied Feb. 26, 1993.

Eason Mitchell and Robert C. Thomas, Jr. of Eason Mitchell, P.C., Alabaster, for appellants.

David B. Anderson and Anne B. Stone of Walston, Stabler, Wells, Anderson & Bains, Birmingham, for appellee.

INGRAM, Justice.

The defendants, William Millette, Ted Millette, and Thomas Millette, appeal from a judgment based on a jury verdict in favor of the plaintiff, O'Neal Steel, in an action to enforce a guaranty agreement. The issues before us are 1) whether the trial court had in personam jurisdiction over the nonresident defendants, Ted Millette and William Millette; and 2) whether the trial court erred in finding that O'Neal's use of its peremptory strikes in jury selection was not racially discriminatory and therefore did not violate Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986), Edmonson v. Leesville Concrete Co., 500 U.S. 614, 111 S.Ct. 2077, 114 L.Ed.2d 660 (1991), and Thomas v. Diversified Contractors, Inc., 551 So.2d 343 (Ala.1989).

The Millettes owned Fabricators, Inc., a corporation with its principal place of business in Pascagoula, Mississippi. The Millettes are residents of Mississippi. O'Neal Steel is a Delaware corporation with its headquarters and principal place of business in Birmingham, Alabama. O'Neal sold steel and steel products to Fabricators, Inc. As a condition for extending a line of credit to Fabricators, O'Neal required the Millettes to execute an agreement guaranteeing the payment of the debt of Fabricators to O'Neal. The Millettes executed the agreement in Pascagoula, Mississippi, on July 31, 1980. The agreement was later modified by letters sent from O'Neal in Birmingham, Alabama, to Fabricators on March 15, 1982, and August 11, 1982. Before the August modification, Thomas Millette and two other representatives of Fabricators met in Birmingham with representatives of O'Neal in order to discuss an increase in Fabricators' line of credit. This case arose from a dispute over the application of the March and August modifications.

Before answering O'Neal's complaint, the Millettes filed a motion to dismiss, alleging a lack of personal jurisdiction, but the trial court overruled the motion. Following discovery, the case proceeded to jury selection. After some prospective jurors were excused for cause, the venire from which the jury was selected consisted of 24 persons, of whom 6 were black. Each party was allowed 6 peremptory strikes. O'Neal used its first 4 peremptory challenges to eliminate blacks from the venire. A jury of 10 whites and 2 blacks was empaneled. After jury selection, the Millettes moved for a mistrial on the basis that O'Neal had improperly used the peremptory strikes in violation of the Equal Protection Clause and Batson. Without explicitly finding that the Millettes had established a prima facie case under Ex parte Branch, 526 So.2d 609, 625 (Ala.1987), the trial court directed O'Neal to state its reasons for striking the black veniremembers.

O'Neal's counsel said to the court that he believed that it was important for the success of O'Neal's case that jury members be able to understand written contracts, modifications, and the written language, because, he said, the case hinged on the interpretation of written agreements.

With regard to each black veniremember that he struck, O'Neal's counsel gave explanations that will be subsequently addressed. O'Neal's counsel did not, however, ask any questions on voir dire regarding the veniremembers' educational background.

At the conclusion of this hearing, the trial court overruled the Millettes' motion, and the case proceeded to trial. After O'Neal had presented its case in chief, the Millettes renewed their motion for a mistrial; the trial court again overruled the motion. After the jury returned a verdict in favor of O'Neal against the Millettes, the Millettes filed a motion for new trial, again asserting a lack of personal jurisdiction over Ted and William Millette and discriminatory use of peremptory challenges to remove blacks from the jury. The motion was overruled, and the Millettes now appeal from the judgment for O'Neal.

Ted and William Millette's first contention is that they did not have contacts with the State of Alabama sufficient for the Jefferson Circuit Court to exercise personal jurisdiction over them. Our task is to determine whether, in this case, in personam jurisdiction exists in an Alabama court via Alabama's long-arm rule. Rule 4.2(a)(2), A.R.Civ.P., sets out the bases for personal jurisdiction over nonresident defendants. It provides in relevant part:

"(2) Sufficient Contacts. A person has sufficient contacts with the state when that person, acting directly or by agent, is or may be legally responsible as a consequence of that person's

"....

"(I) otherwise having some minimum contacts with this state and, under the circumstances, it is fair and reasonable to require the person to come to this state to defend an action. The minimum contacts referred to in this subdivision (I) shall be deemed sufficient, notwithstanding a failure to satisfy the requirement of subdivisions (A)-(H) of this subsection (2), so long as the prosecution of the action against a person in this state is not inconsistent with the constitution of this state or the Constitution of the United States." ¹

Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), requires that a nonresident defendant have certain minimum contacts with a state in order for that state's courts to acquire personal jurisdiction over that defendant. In Keelean v. Central Bank of the South 544 So.2d 153 (Ala.1989), this Court set out a twofold analysis used in this state in determining whether an Alabama court can exercise personal jurisdiction over a nonresident defendant:

"1) the determination of whether it is foreseeable to that nonresident defendant that he will be sued in this state; and

"2) the determination of the degree of contact that the nonresident defendant has with this state."

Keelean, 544 So.2d at 156, citing Alabama Waterproofing Co. v. Hanby, 431 So.2d 141 (Ala.1983); Duke v. Young, 496 So.2d 37 (Ala.1986); and Shrout v. Thorsen, 470 So.2d 1222 (Ala.1985).

In Keelean, Central Bank was asked to lend money to a Florida corporation, Holdco. As a prerequisite for lending money to Holdco, Central required several individuals to sign a guaranty agreement. In that case we noted that it appeared that all of the guarantors were aware that they were guaranteeing payment of the debts of a Florida corporation that was borrowing $4,000,000 from an Alabama corporation. We concluded: "It is quite foreseeable that upon the default of that loan, they would be held accountable on their contracts of guaranty in the State of Alabama." Keelean, 544 So.2d at 157.

The Millettes argue that it was not foreseeable that they would be haled into the courts of Alabama. In support of this contention they point out that Ted and William Millette never traveled to Alabama during their negotiations with O'Neal. Rather, negotiations between Ted and William Millette and O'Neal took place in Pascagoula, Mississippi. There is no dispute that the guaranty agreement was signed in Mississippi.

Although O'Neal is a Delaware corporation, its principal place of business and its corporate headquarters are in Birmingham, Alabama. The credit office, from which the line of credit and both of its modifications were approved, is located in Birmingham, Alabama. In fact, O'Neal required Thomas Millette and other representatives of Fabricators to travel to Birmingham to discuss a modification of the credit agreement.

It appears that the Millettes knew that they were guaranteeing the debts of Fabricators and knew that Fabricators was purchasing steel on credit from a corporation located in Birmingham, Alabama. It, therefore, is foreseeable that upon a default by Fabricators, O'Neal would hold the Millettes accountable on the guaranty in the State of Alabama.

The Millettes attempt to distinguish our analysis in Keelean by pointing out that while Central Bank is an Alabama corporation, O'Neal is incorporated in Delaware. We hold that when the plaintiff corporation has its headquarters and principal place of business in Alabama, the state from which it received its corporate charter is irrelevant in the application of our long-arm rule.

Ted and William Millette further argue that the "degree of contact" prong of our test is not satisfied because, they say, they had no contact with O'Neal in Alabama before the execution of the guaranty agreement. Without duplicating here our opinion in Keelean, we hold, applying the "effects test" mandated by Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984); Alabama Waterproofing; and Duke v. Young, that the Millettes should have foreseen the effects of their guaranty in the State of Alabama in the event of a default by Fabricators. Moreover, the signing of the guaranty and the negotiation of its modifications gave the Millettes the fair notice required by Burger King Co. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). In order for the courts of Alabama to exercise in personam jurisdiction over a nonresident defendant, it is not necessary that he actually have any physical presence in Alabama, so long as his conduct is such that he should foresee that his actions would have effects in this state.

We hold, therefore, that by their conduct in negotiating the line of credit, executing the guaranty, and negotiating its modification, Ted and William Millette had contact with this state sufficient to meet the requirements of the 14th Amendment to the United States Constitution, so that the Alabama court had in personam jurisdiction pursuant to Rule 4.2(a)(2)(I).

We now...