Northern Aircraft, Inc. v. Reed

• Decision Date: 02 March 1990
• Docket Number: No. 89-259,89-259
• Parties: NORTHERN AIRCRAFT, INC. v. William O. REED, M.D.
• Court: Vermont Supreme Court

Page 1382

572 A.2d 1382

154 Vt. 36

NORTHERN AIRCRAFT, INC. v. William O. REED, M.D.

No. 89-259.

Supreme Court of Vermont.

March 2, 1990.

Peter S. Sidel and Diana Pikulski of Sidel & Associates, Waitsfield, for plaintiff-appellee.

Stephen J. Soule of Paul, Frank & Collins, Inc., Burlington, and Stephen J. Dennis of Niewald, Waldeck, Norris & Brown, Overland Park, Kan., for defendant-appellant.

Before ALLEN, C.J., PECK and DOOLEY, JJ., BARNEY, C.J. (Ret.) and SPRINGER, District Judge (Ret.), Specially Assigned.

DOOLEY, Justice.

The superior court granted plaintiff's motion for summary judgment, holding that plaintiff was entitled to a sales commission on the sale of defendant's aircraft. Defendant appeals, claiming two errors: (1) the trial court could not render a valid judgment because it lacked personal jurisdiction over him; and (2) summary judgment was improper as there were genuine issues of material fact. We affirm.

In March of 1986, defendant, Dr. William O. Reed, a resident of Kansas, telephoned James Campbell, president of plaintiff Northern Aircraft, Inc., a Vermont corporation, and requested his assistance in selling an aircraft owned by defendant. After the initial telephone call, plaintiff mailed an Aircraft Listing Agreement to defendant which he executed and returned on March 27, 1986. The agreement made plaintiff the exclusive sales agent for a minimum period of ninety days and authorized it to sell the aircraft for a price of $194,000 or for a lesser amount with defendant's permission. Additionally, the agreement stated that defendant agreed: "To cooperate fully with agent and refer any inquiries to him; ... to conduct all negotiations through him; to pay agent a brokerage commission of 5% of selling price in the event agent produces a purchaser ready, willing and able to buy the aircraft, on the terms herein provided." Under the terms of the contract, plaintiff was also entitled to a commission "if an agreement to sell the aircraft is executed by owner and purchaser through ... efforts of the ... owner ... during the period of this agreement."

Prior to signing the listing agreement, defendant had received an offer of $175,000 for the aircraft. This offer was still open at the time defendant signed the agreement. After signing the agreement, defendant became concerned with plaintiff's progress and called plaintiff's president by telephone on several occasions, but the calls went unanswered. Approximately one month after defendant signed the agreement, he accepted the outstanding $175,000 offer and notified plaintiff on April 26, 1986 that he had sold his aircraft. Defendant did not pay plaintiff a commission after he sold the aircraft.

On February 29, 1988, plaintiff filed suit in Chittenden Superior Court for five percent of the sale amount alleging breach of contract. Defendant moved to dismiss for lack of personal jurisdiction but that motion was denied. On November 18, 1988, plaintiff moved for summary judgment relying on the contract and two affidavits defendant had submitted with his motion to dismiss. When defendant failed to respond, the court granted plaintiff's motion for summary judgment on January 6, 1989. An attempt by defendant to persuade the court to reconsider failed, and defendant appealed to this Court.

Defendant's first claim of error on appeal is that the Vermont courts lack personal jurisdiction over him. In his affidavits, defendant stated that he had never traveled to Vermont and his only contact with plaintiff had been by telephone and through the mail. Further, he stated that he owned no property in Vermont and that the aircraft itself had been at all times located in Kansas. Based on these facts, defendant argued that he does not have sufficient minimum contacts with Vermont and requiring him to defend himself in this state would be unreasonable.

While defendant is correct that his contact with Vermont was limited, this fact alone does not defeat jurisdiction. It is not the quantity of contacts with the forum state that give rise to personal jurisdiction, but rather, the nature and quality of defendant's activities. For the reasons discussed below, we find that defendant's contact with Vermont was sufficient.

Before a nonresident defendant can be brought into a Vermont court, the plaintiff must show that the Vermont long arm statute reaches the defendant, and that jurisdiction over him may be maintained without offending the Due Process Clause of the Fourteenth Amendment of the United States Constitution. The Vermont long arm statute, 12 V.S.A. § 913(b), states:

(b) Upon the service [of process on a party outside the state], and if it appears that the contact with the state by the party or the activity in the state by the party or the contact or activity imputable to him is sufficient to support a personal judgment against him, the same proceedings may be had for a personal judgment against him as if the process or pleading had been served on him in the state.

This section reflects a clear policy to assert jurisdiction over individual defendants to the full extent permitted by the Due Process Clause. See Pasquale v. Genovese, 136 Vt. 417, 419, 392 A.2d 395, 397 (1978); see also V.R.C.P. 4(e); Reporter's Notes to V.R.C.P. 4(e) (this rule provides for service outside the state and incorporates the language of long arm statute which "reaches to the outer limits permitted by the due process clause"). The jurisdictional issue must therefore be resolved under federal constitutional law, as defined in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny. See Chittenden Trust Co. v. Bianchi, 148 Vt. 140, 141, 530 A.2d 569, 570 (1987).

The Due Process Clause limits the power of a state court to render judgments against nonresident defendants. See Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 108, 107 S.Ct. 1026, 1031, 94 L.Ed.2d 92 (1987). In order to invoke personal jurisdiction over an individual defendant, the defendant must have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " International Shoe Co., 326 U.S. at 316, 66 S.Ct. at 158 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940)). This "minimum contacts" requirement serves two purposes: it protects defendants from being forced to defend themselves in a "distant or inconvenient forum," and it "acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980).

The "unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of [minimum] contact with the forum State." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). Additionally, the foreseeability of being summoned into a foreign jurisdiction, while not wholly irrelevant, "has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause." World-Wide Volkswagen, 444 U.S. at 295-97, 100 S.Ct. at 566-67. Rather, the critical consideration is whether "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." Id. at 297, 100 S.Ct. at 567. This reasonableness requirement is met when a defendant purposefully directs his or her activities towards residents of the forum State and the litigation that results arises from those activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 2181, 85 L.Ed.2d 528 (1985). Under this "purposeful availment" requirement, a defendant cannot be summoned into a jurisdiction merely as a result of fortuitous, attenuated or random contacts.

Finally, once the court determines that a nonresident defendant has "purposefully established minimum contacts within the forum State," id. at 476, 105 S.Ct. at 2184, several factors must be considered to ensure that exercising personal jurisdiction over the defendant is reasonable and will not offend International Shoe's "traditional notions of fair play and substantial justice." Asahi Metal Industry, 480 U.S. at 113, 107 S.Ct. at 1033.

A court must consider the burden on the defendant, the interests of the forum State, and the plaintiff's interest in obtaining relief. It must also weigh in its determination "the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies."

Id. at 113, 107 S.Ct. at 1034 (quoting World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. at 564).

Defendant, relying primarily on Robinson v. International Industries Limited, 139 Vt. 444, 430 A.2d 457 (1981), and Carothers v. Vogeler, 148 Vt. 316, 532 A.2d 580 (1987), argues that he does not have the requisite minimum contacts with Vermont to invoke jurisdiction. We disagree. In Robinson, a Vermont resident ordered goods from a supplier in Florida who in turn ordered the goods from the manufacturer in Tennessee. 139 Vt. at 445, 430 A.2d at 458. The supplier requested that the prepaid goods be shipped directly to Vermont by common carrier. Aside from this transaction, the manufacturer had no other contact with Vermont. We found that there was no minimum contact with Vermont because title to the goods passed in Tennessee and the goods were shipped to Vermont under the direction of their owner. Id. at 446, 430 A.2d at 459. We therefore concluded that plaintiff's cause of action arose at the time and place of the goods' delivery, which was in Tennessee. Id.

We also determined that personal jurisdiction did not exist in Carothers, although...