Rose v. Silver

• Decision Date: 30 October 1978
• Docket Number: No. 12555.,12555.
• Citation: 394 A.2d 1368
• Parties: Michael T. ROSE, Appellant, v. Jules SILVER et al., Appellees.
• Court: D.C. Court of Appeals

Page 1368

394 A.2d 1368

Michael T. ROSE, Appellant, v. Jules SILVER et al., Appellees.

No. 12555.

District of Columbia Court of Appeals.

Argued April 13, 1978.

Decided October 30, 1978.

Randy M. Mott, Washington, D. C., for appellant.

Harvey M. Katz, for appellees.

Before NEWMAN, Chief Judge, and MACK and FERREN, Associate Judges.

FERREN, Associate Judge:

This appeal presents one question: whether an attorney (the appellant) hired by a Connecticut corporation and its president (the appellees) and sent to the District of Columbia to establish an office, negotiate on behalf of the corporation with the federal Food and Drug Administration (FDA), and, if necessary, litigate against the FDA, can sue the corporation in Superior Court under the District of Columbia "long-arm statute." D.C.Code 1973, § 13-423(a)(1).¹ Primarily on the basis of our decision in Environmental Research International, Inc. v. Lockwood Greene Engineers, I. D.C. App., 855 A.2d 808 (1976) (en banc), the trial court dismissed the complaint for lack of personal jurisdiction. We hold that Lockwood Greene, supra, is materially from this case, that appellant did obtain personal jurisdiction over appellees under the long-arm statute, and that the trial court's dismissal accordingly must be reversed and appellant's complaint reinstated.

I.

According to the complaint and proposed amended complaint (which the court denied leave to file), on September 16, 1974, attorney-appellant Michael T. Rose, a resident of Colorado, entered into a contract with appellees Masti-Kure Products Company, Inc., a Connecticut corporation, and Jules Silver, its president and chief executive officer, also a resident of Connecticut, for the provision of legal services. Pursuant to that agreement, appellant was to negotiate with the FDA and, if necessary, litigate in an effort to keep the corporation's product, "Masti-Kure," an antibiotic used to treat dairy cattle, on the market until the FDA tactic final action on its preliminary notice of decertification of that product. (According to appellant's brief, which appellees do not dispute on the point, the FDA had acted to revoke the certification of Masti-Kure as well as similar products manufactured by other firms, on the ground of inadequate evidence of the products' effectiveness.)

The agreement provided for remuneration of $2,000 per week for a minimum of SO billable hours, as well as a $500 per week contingency fee dependent on appellant's success in obtaining continued marketability of Masti-Kure until final FDA action. The agreement also authorized appellant to incur reasonable expenses for "office and apartment rentals, secretarial services, telephone services, transportation costs, costs of research assistants, [and] documents reproduction costs."

Appellant accordingly moved to the District of Columbia to perform the services, incurring expenses as authorized. He claims that between September 2 and October 21, 1974, he negotiated with the FDA, then filed a suit in the federal district court here, Masti-Kure Products Company, Inc. v. Weinberger, No. 74-1444 (D.D.C.1974), and eventually obtained a preliminary injunction permitting the marketing of Masti-Kure until final FDA action.

In the present complaint, filed March 30, 1977, appellant seeks a total of $14,253.62-$3,500 for unpaid contingency fees, $753.62 for unreimbursed expenses, and $10,000 in consequential damages attributable to alleged impairment of his credit and expenses incurred in attempting to collect from appellees. The trial court granted appellees' motion to dismiss for want of personal jurisdiction on June 7, 1977, and, on August 5, 1977, denied appellant's motion for reconsideration.

II.

We have recognized that in enacting the long-arm statute, D.C.Code 1973, § 13-423, Congress intended to provide District of Columbia courts with in personam jurisdiction equivalent in scope to that in effect in the neighboring states of Maryland and Virginia. Lockwood Greene, supra at 810; Margoles v. Johns, 157 U.S.App.D.C. 209, 483 F.2d 1212 (1973); see S.Rep. No. 405, 91st Cong., 1st Sess. 35 (1969); H.R.Rep. No. 907, 91st Cong., 2d Sess. 61 (1970). We have acknowledged, too, that Maryland and Virginia have interpreted their statutes to permit the exercise of personal jurisdiction over nonresident defendants to the full extent permitted by the due process clause of the Fifth and Fourteenth Amendments. Lockwood Greene, supra at 810-11; see Kolbe Inc. v. Chromodern Chair Co., 211 Va. 736, 180 S.E.2d 664 (1971); Groom v. Margulies, 257 Md. 691, 265 A.2d 249 (1970). Thus, the principal question here is whether appellant can bring his suit in the District of Columbia under § 13-423(a)(1) ("transacting any business"), consistent with due process. See Lockwood Greene, supra at 810-11.

The Supreme Court recently has stated that "[t]he existence of personal jurisdiction . . . depends upon [1] the presence of reasonable notice to the defendant that an action has been brought . . ., and [2] a sufficient connection between the defendant and the forum state as to make it fair to require defense of the action in the forum." Kulko v. Superior Court of California, 436 U.S. 84, 91, 98 S.Ct. 1690, 1696-97, 56 L.Ed.2d 132 (1978) (citations omitted). As to the second requirement — the only one at issue here — the Court reaffirmed the rule of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), that fairness presupposes a defendant has had "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.'" Id. at 316, 66 S.Ct. at 158 (citation omitted). Accord, Shaffer v. Heitner, 433 U.S. 186, 207-12, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). Necessarily, according to Kulko, supra, "the `minimum contacts' test of International Shoe is not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite `affiliating circumstances' are present." Kulko, supra 98 S.Ct. at 1697 (citing Hanson v. Denckla, 357 U.S. 235, 246, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)).

In Lockwood Greene, supra, we applied the "minimum contacts" test to facts analogous — but not similar — to those in the present case. There we affirmed dismissal for lack of jurisdiction of an action brought under § 13-423(a)(1) by Environmental Research, a District of Columbia corporation, for services rendered in the District of Columbia under a contract with two foreign corporations, Lockwood Greene and Penn Dye. Environmental Research, a consulting firm, had learned that Lockwood Greene and Penn Dye were interested in seeking a construction grant from the Environmental Protection Agency (EPA) to help solve an industrial waste problem. Environmental Research accordingly contacted Lockwood Greene and Penn Dye, offering its services to help prepare the application and obtain the EPA grant. We accepted the trial court's finding that Environmental Research was an "independent contractor" which had solicited the foreign corporations as customers. We then concluded that neither the appellant's activities in the District of Columbia nor the corporate officers' own occasional visits here to meet with appellant and EPA officials could meet the minimum contacts test, as articulated in International Shoe, supra, and Hanson v. Denckla, supra; i. e., "some act by which the defendant purposefully avails itself of the privilege of conducting activities with the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, supra at 253, 78 S.Ct. at 1240.

Our discussion turned on two findings: first, the foreign corporations could not be said to have established a presence in the District of Columbia solely through an agreement with Environmental Research, an independent contractor; "[t]he unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State." Id.; see Lockwood Greene, supra at 812. Second, the occasional visits of the corporation's officials could not constitute the transaction of business in the District, given the long-standing principle that mere entry by nonresidents for the purpose of contacting federal government agencies cannot serve as a basis for in personam jurisdiction (commonly called the "government contacts" principle). Id. at 813; see Weisblatt v. United Aircraft Corp., D.C.Mun.App., 134 A.2d 713 (1957); Fandel v. Arabian American Oil Co., 120 U.S.App. D.C. 193, 345 F.2d 87 (1965); Traher v. DeHavilland Aircraft of Canada, Ltd., 111 U.S.App.D.C. 33, 294 F.2d 229 (1961), cert. denied, 368 U.S. 954, 82 S.Ct. 397, 7 L.Ed.2d 387 (1962); Mueller Brass Co. v. Alexander Milburn Co., 80 U.S.App.D.C. 274, 152 F.2d 142 (1945); Siam Kraft Paper Co., Ltd. v. Parson & Whittemore, Inc., 400 F.Supp. 810 (D.D.C.1975), aff'd, 172 U.S.App.D.C. 224, 521 F.2d 324 (1975).

III.

This case is different. Reversal here is mandated by the fact that appellant Rose — unlike the appellant in Lockwood Greene, supra — was not an independent contractor. The record reflects that he was appellees' agent. It follows, therefore, even without regard to the occasional visits to the District by appellees' other representatives, that appellees were "transacting . . business" in the District "by an agent" within the meaning of § 13-423(a)(1), see note 1 supra, and that appellees accordingly had established the "minimum contacts" necessary for personal jurisdiction over them in the District consistent with due process. We have arrived at this conclusion after determining, for long-arm jurisdictional purposes, what an "agent" is (in contrast with an "independent contractor") and then applying the test to the facts here.²

According to the Restatement (Second) of Agency § 1(1) (1957), "[a]gency is the fiduciary relationship which results from the...