PORTLAND TRAILER v. A-1 Freeman Moving

• Decision Date: 19 April 2000
• Citation: 5 P.3d 604,166 Or. App. 651
• Parties: PORTLAND TRAILER & EQUIPMENT, INC., an Oregon corporation; and Tom Beason, an individual, Appellants, v. A-1 FREEMAN MOVING & STORAGE, INC., an Oklahoma corporation; and Rob F. Robertson, an individual, Respondents.
• Court: Oregon Court of Appeals

5 P.3d 604

166 Or. App. 651

PORTLAND TRAILER & EQUIPMENT, INC., an Oregon corporation; and Tom Beason, an individual, Appellants, v. A-1 FREEMAN MOVING & STORAGE, INC., an Oklahoma corporation; and Rob F. Robertson, an individual, Respondents.

(9805-03819; CA A104316)

Court of Appeals of Oregon.

Argued and Submitted March 13, 2000.

Decided April 19, 2000.

Roger A. Lenneberg, Portland, argued the cause for appellants. On the opening brief were W. Frank Elsasser and Grant & Lenneberg.

David C. Landis, Portland, argued the cause and filed the brief for respondent Rob F. Robertson.

No appearance by respondent A-1 Freeman Moving & Storage, Inc.

Before LANDAU, Presiding Judge, and LINDER and BREWER, Judges.

BREWER, J.

Plaintiffs appeal from a judgment dismissing their complaint against defendants for wrongful use of a civil proceeding based on lack of personal jurisdiction. ORCP 21 A; ORCP 4. Plaintiffs contend that the trial court erred in concluding that defendants' conduct in causing summons and complaint in an unmeritorious Oklahoma action to be served on them in Oregon and defendants' ensuing communications with plaintiffs in Oregon relating to that litigation, were insufficient to confer jurisdiction over defendants in Oregon's courts. We conclude that, in keeping with the demands of due process, personal jurisdiction lies against defendants under ORCP 4 L. We therefore reverse and remand.

Plaintiff Portland Trailer and Equipment, Inc. (Portland Trailer) is an Oregon corporation whose principal place of business is also in Oregon. Plaintiff Thomas Beason is an Oregon resident who, acting as an independent contractor, sells truck trailers in interstate commerce. Defendant A-1 Freeman Moving & Storage, Inc. (Freeman), is an Oklahoma corporation, and defendant Rob Robertson is an attorney licensed to practice law in Oklahoma.

In 1995, Robertson filed an action (the Oklahoma action) on behalf of Freeman against plaintiffs in the United States District Court for Oklahoma. The complaint alleged claims for fraud and breach of contract arising from a fractured transaction for the purchase and sale of multiple used trailers. Robertson, on behalf of Freeman, arranged for Portland Trailer to be served with summons and complaint by certified mail at its office in Oregon and also caused Beason to be personally served by a private process server at his residence in Oregon. Plaintiffs retained both Oregon and Oklahoma counsel to represent them. During the course of the Oklahoma action, Robertson held telephone conferences with plaintiffs' Oregon attorney and also mailed and faxed pleadings and correspondence to the Oregon attorney.

The Oklahoma action was eventually referred to nonbinding court-annexed arbitration. Plaintiffs prevailed in the arbitration proceeding and were awarded their attorney fees by the arbitrator. Freeman requested trial de novo but ultimately dismissed the Oklahoma action without prejudice. Under Oklahoma law, the dismissal effectively deprived plaintiffs of the attorney fees awarded by the arbitrator. Plaintiffs then initiated this action against defendants for wrongful use of a civil proceeding in order to recover their expenses incurred in defending the Oklahoma action. Defendants moved to dismiss the action for want of personal jurisdiction, and the trial court granted that motion. Plaintiffs appeal from the ensuing judgment of dismissal.

Plaintiffs have the burden of alleging and proving facts sufficient to establish personal jurisdiction. Dreher v. Smithson, 162 Or.App. 645, 648, 986 P.2d 721 (1999), rev. den. 329 Or. 589, 994 P.2d 130 (2000). We construe pleadings and affidavits liberally to support jurisdiction. Id. Once the jurisdictional facts are established, we review the determination of personal jurisdiction for errors of law. Boehm & Co. v. Environmental Concepts, Inc., 125 Or.App. 249, 252, 865 P.2d 413 (1993). At trial and again on appeal, plaintiffs contend that personal jurisdiction existed under various subsections of ORCP 4.

We begin our analysis with plaintiffs' reliance on ORCP 4 C, which provides that a court of this state has jurisdiction over a party "[i]n any action claiming injury to person or property within or without this state arising out of an act or omission within this state by the defendant." In applying ORCP 4 C, we first consider whether that subdivision applies to the facts of this case. Id. at 253, 865 P.2d 413. If it does, we next determine whether the exercise of personal jurisdiction over nonresident defendants under the circumstances comports with due process. Biggs v. Robert Thomas, O.D., Inc., 133 Or.App. 621, 626, 893 P.2d 545, rev. den. 321 Or. 560, 901 P.2d 858 (1995).

Plaintiffs argue that "[b]ecause the tort in question, wrongful use of a civil proceeding, requires the institution of legal proceedings which, in turn, requires service of summons and complaint, an essential element of the subject tort occurred within this state." Plaintiffs assert further that "each pleading, letter[,] and phone call made to Oregon counsel was a continuation of the tort, because each [of those activities] caused plaintiffs to incur further damages in the form of additional attorney fees." Plaintiffs reason that, because defendants engaged in tortious conduct within Oregon, jurisdiction lies under ORCP 4 C irrespective of the location where plaintiffs suffered injury. Defendant counters that the initiation and termination of the Oklahoma action both occurred in Oklahoma, and thus plaintiffs' claim did not arise from conduct occurring in Oregon. We need not resolve the parties' dispute, however, because ORCP 4 C is inapposite for another reason.

ORCP 4 C applies only to claims for personal injury or injury to property. The rule does not mention damages arising from economic loss. Although not defined in ORCP 4, each of the foregoing types of damage has a well established and mutually exclusive legal meaning. The term "economic loss" describes financial losses such as indebtedness incurred and return of monies paid, as distinguished from damages for injury to person or property. Onita Pacific Corp. v. Trustees of Bronson, 315 Or. 149, 159 n. 6, 843 P.2d 890 (1992); Ore-Ida Foods v. Indian Head, 290 Or. 909, 916, 627 P.2d 469 (1981) (economic loss can also be characterized as interference with economic expectancy or prospective economic advantage). Plaintiffs' complaint does not allege damages for personal injury or injury to property. Instead, it only seeks damages for economic loss in the form of attorney fees incurred as a result of defendants' conduct. Because plaintiffs do not seek either of the types of damages required by ORCP 4 C, the parties' disagreement about the situs of defendants' conduct is beside the point. ORCP 4 C simply does not apply to plaintiffs' claim. Despite defendants' failure to identify the precise flaw in plaintiffs' reliance on ORCP 4 C, we must confront it in order to avoid the misinterpretation of a statutory provision. Stull v. Hoke, 326 Or. 72, 77, 948 P.2d 722 (1997); State v. Williams, 161 Or.App. 111, 116, 984 P.2d 312 (1999).

Plaintiffs next assert that jurisdiction exists under ORCP 4 D. That rule confers jurisdiction over a party:

"In any action claiming injury to person or property within this state arising out of an act or omission outside this state by the defendant, provided in addition that at the time of the injury, either:

"D(1) Solicitation or service activities were carried on within this state by or on behalf of the defendant; or

"D(2) Products, materials, or things distributed, processed, serviced, or manufactured by the defendant were used or consumed within this state in the ordinary course of trade."

There are two difficulties with plaintiffs' argument. First, ORCP 4 D, like subsection 4 C, requires either a claim for injury to person or property, and plaintiffs have pleaded none. Second, although plaintiffs suggest that defendants conducted service activities, the term "service," as used in ORCP 4 D, means the performance of a business function auxiliary to the production or distribution of products, materials, or things. Columbia Boat Sales v. Island Packet Yachts, 105 Or.App. 85, 88, 803 P.2d 283 (1990). The wrongful use of a civil proceeding is not conduct associated with production or distribution in the sense contemplated by the rule. Thus, ORCP 4 D is also inapplicable to the facts of this case.

Plaintiffs rely, in the last instance, on ORCP 4 L, the "catchall" provision, which creates personal jurisdiction:

"Notwithstanding a failure to satisfy the requirement of sections B through K of this rule, in any action where prosecution of the action against a defendant in this state is not inconsistent with the Constitution of this state or the Constitution of the United States."

Under ORCP 4 L, the exercise of jurisdiction over a nonresident defendant is consistent with due process, and thus constitutional, if the defendant has minimum contacts with the forum state and the assertion of jurisdiction would comport with notions of fair play and substantial justice. State ex rel Circus Circus Reno, Inc. v. Pope, 317 Or. 151, 159-60, 854 P.2d 461 (1993). Minimum contacts exist when the defendant "has `purposefully directed' its activities at residents of the forum state and where the litigation `arises out of or relates to' those activities." Id. at 159, 854 P.2d 461 (emphasis in original). Defendants argue that they did not ...