Northwest Airlines, Inc. v. Astraea Aviation Services, Inc.

• Decision Date: 28 May 1997
• Docket Number: No. 96-2761,96-2761
• Citation: 111 F.3d 1386
• Parties: NORTHWEST AIRLINES, INC., a Minnesota corporation, Plaintiff/Appellee, v. ASTRAEA AVIATION SERVICES, INC., doing business as Dalfort Aviation, a Texas Corporation, Defendant/Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1386

111 F.3d 1386

NORTHWEST AIRLINES, INC., a Minnesota corporation, Plaintiff/Appellee, v. ASTRAEA AVIATION SERVICES, INC., doing business as Dalfort

Aviation, a Texas Corporation, Defendant/Appellant.

No. 96-2761.

United States Court of Appeals,

Eighth Circuit.

Submitted March 12, 1997.

Decided April 24, 1997.

Rehearing Denied May 28, 1997.

Francis B. Majorie, Dallas, TX (argued), Keith P. Ray, Tricia E. Kennedy, Pauline P. Rea, on the brief, for Defendant-Appellant.

Thomas W. Tinkham, Minneapolis, MN (argued), Perry M. Wilson, III, Peter W. Carter, Nicholas A.J. Vlietstra, on the brief, for Plaintiff-Appellee.

Before MAGILL and MURPHY, Circuit Judges, and GOLDBERG, ¹ Judge.

MURPHY, Circuit Judge.

Northwest Airlines, Inc. (Northwest) contracted with Astraea Aviation Services, Inc. (Astraea) for Astraea to perform routine maintenance on Northwest aircraft and to refurbish other newly acquired aircraft. After problems arose in completing the work, Northwest sued Astraea for breach of contract in Minnesota state court. Astraea removed the case to federal court and counterclaimed, alleging contract and tort claims against Northwest. The district court ² denied Astraea's motion to dismiss for lack of personal jurisdiction and then granted Northwest's motion for summary judgment on Astraea's counterclaims. We affirm.

In late 1993, representatives of Astraea attended several meetings in Minnesota concerning proposals for undertaking work to refurbish aircraft which Northwest had purchased from another carrier. These meetings included a preliminary meeting attended by several potential bidders for the refurbishment contracts, as well as meetings where Astraea submitted proposals and negotiated the refurbishment contracts. In addition, Astraea made numerous phone calls to Northwest's offices in Minnesota during this time.

Several contracts resulted. On December 10, 1993, the first refurbishment contract was executed by the parties in Minnesota. This contract was amended by a letter agreement in March 1994, which also created a second refurbishment contract and provided that Astraea would refurbish additional planes. Finally, the parties then entered into a maintenance contract in September 1994, under which Astraea was to provide routine maintenance for some Northwest aircraft.

All three contracts contained choice of law provisions stating that the laws of Minnesota would govern. The refurbishment contracts stated that they "shall be deemed entered into within" Minnesota, and the maintenance contract contained a choice of forum provision which stated that "[Astraea] hereby submits to the jurisdiction and venue of the courts of the State of Minnesota with respect to all disputes arising hereunder."

After the contracts were executed, Northwest began delivering aircraft to Astraea in Dallas, sending twenty-five planes to Astraea's hangars over the course of more than a year. Northwest stationed some of its employees in Dallas to oversee the work and sent to Dallas engineering information, operating manuals, and parts to be used in the planes from various locations, including Minnesota. Astraea representatives also traveled to Minnesota on at least three occasions to discuss issues under the contracts. As the work progressed, disputes arose about its quality, and there were delays in completing the aircraft.

After these problems arose, a reporter for a Minneapolis newspaper contacted a Northwest representative at its Minnesota headquarters about the disputes. The representative told the reporter that Northwest had concerns about the quality of Astraea's work, including defective parts and a leaky fuel line and undetected tail crack on one of the aircraft. Those statements were included in an article in the Minneapolis newspaper. Copies of the article were faxed to Northwest employees in Texas, and Astraea claims that a Northwest employee distributed copies of the faxed article to Astraea customers. A Texas newspaper also reprinted the article in Texas.

On July 14, 1995, Northwest sued Astraea in Minnesota state court under all three contracts, ³ alleging that Astraea had breached the contracts by delivering the planes late and not performing to specifications. Astraea removed the suit to federal district court and moved to dismiss for lack of personal jurisdiction. After the district court ruled that Northwest had made a sufficient prima facie showing of jurisdiction, Astraea counterclaimed, alleging breach of contract, fraud, and defamation by Northwest as well as other tort and unjust enrichment claims. Northwest pled the affirmative defense of accord and satisfaction to the breach of contract claims and moved for summary judgment on the counterclaims. After the district court granted the motion, the parties settled the remaining claims which were dismissed with prejudice. Astraea appeals the assertion of jurisdiction over it and the dismissal of its counterclaims.

I.

Astraea claims there was no personal jurisdiction over it in Minnesota because it did not have a "general presence" in the state and the acts giving rise to the claims did not occur in it. The district court's decision on personal jurisdiction is reviewed de novo. Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir.1995).

The Minnesota long-arm statute, Minn.Stat. § 543.19, is applied to the fullest extent permitted under the due process clause of the fourteenth amendment. Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410-11 (Minn.1992). The due process clause requires that a defendant have sufficient minimum contacts with the forum so that traditional notions of fair play and substantial justice are not offended. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). To establish sufficient minimum contacts, a defendant must have "purposefully avail[ed] itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958)). Three primary factors, (1) the nature and quality of the contacts, (2) the quantity of the contacts, and (3) the relation of the cause of action to the contacts, are then considered, as well as two secondary factors, (1) the interest of the forum state in the litigation, and (2) the convenience of the parties, to determine whether personal jurisdiction comports with fair play and substantial justice. Minnesota Min. & Mfg. v. Nippon Carbide Indus., 63 F.3d 694, 697 (8th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1288, 134 L.Ed.2d 232 (1996).

Astraea claims that the choice of law clauses in the contracts, telephone calls into the state, and meetings in Minnesota were not sufficient to create personal jurisdiction when viewed in the context of the parties' dealings. Personal jurisdiction depends upon a "defendant's contacts with the forum in the aggregate, not individually" and the "totality of the circumstances." Northrup King, 51 F.3d at 1388. While a choice of law provision in itself is insufficient to create personal jurisdiction, it remains a relevant consideration in determining whether a defendant has purposefully availed itself in the forum state. Wessels, Arnold & Henderson v. National Med. Waste, Inc., 65 F.3d 1427, 1434 (8th Cir.1995). Phone calls into a state are also a relevant contact, although they also do not in themselves establish jurisdiction. See Digi-Tel Holdings, Inc. v. Proteq Telecommunications (PTE), Ltd., 89 F.3d 519, 523 (8th Cir.1996).

Astraea had several contacts with Minnesota which related to the disputed contracts under which Northwest brought its breach of contract claims. Some relevant contract discussions took place in Minnesota, and representatives of Astraea went there on several occasions to negotiate the contracts in late 1993. In one of these meetings the parties signed a letter of intent and drafted the tentative form of the refurbishment contract. Astraea made over 200 phone calls to Northwest in 1993, and the first refurbishment contract was signed by both parties in Minnesota in December 1993. Over the course of the contractual period, Astraea representatives went to Minnesota at least three more times to discuss the contracts in 1994 and 1995.

All three contracts which Northwest and Astraea negotiated stated that they would be governed by Minnesota law, and Astraea expressly agreed in the maintenance contract to submit to the jurisdiction of Minnesota courts for any disputes arising under that contract. These provisions and Astraea's other state contacts related to the contracts show that it "purposefully availed" itself of conducting business in Minnesota and that it could have reasonably expected to be sued there. The district court did not err in denying the motion to dismiss for lack of personal jurisdiction.

II.

Astraea appeals from the grant of summary judgment on its breach of contract counterclaims concerning the first refurbishment contract. It argues that the district court incorrectly concluded that Northwest's payment of a final bill presented by Astraea for work done under that contract was a settlement for those claims and resulted in an accord and satisfaction. Summary judgment is reviewed de novo. Stevens v. St. Louis Univ. Med. Ctr., 97 F.3d 268, 270 (8th Cir.1996).

Astraea concedes that Minnesota law governs its breach of contract counterclaims and Northwest's defense of an accord and satisfaction because of the choice of law provisions in the contracts. Under Minnesota law, an accord and satisfaction may occur "when a creditor accepts part payment of an unliquidated debt which the debtor tenders in full satisfaction of the debt ... and the creditor accepts that offer." Don Kral Inc. v....