Schocket v. Classic Auto Sales, Inc.

• Decision Date: 28 March 1991
• Docket Number: No. 90CA0254,90CA0254
• Parties: Alan L. SCHOCKET, M.D., Plaintiff-Appellant, v. CLASSIC AUTO SALES, INC., a Nebraska Corporation, and Terry Kuehl, Individually, Defendants-Appellees. . I
• Court: Colorado Court of Appeals

Page 561

817 P.2d 561

Alan L. SCHOCKET, M.D., Plaintiff-Appellant, v. CLASSIC AUTO SALES, INC., a Nebraska Corporation, and Terry Kuehl, Individually, Defendants-Appellees.

No. 90CA0254.

Colorado Court of Appeals Div. I.

March 28, 1991.

Rehearing Denied April 25, 1991.

Certiorari Granted Oct. 7, 1991.

Delap & Barry, P.C., Herbert A. Delap, Denver, for plaintiff-appellant.

Otten, Johnson, Robinson, Neff, and Ragonetti, P.C., Kenneth K. Skogg, Denver, for defendants-appellees.

Opinion by Judge PIERCE.

Plaintiff, Alan L. Schocket, appeals a judgment dismissing his complaint for lack of personal jurisdiction over defendants, Classic Auto Sales, Inc. (Classic) and Terry Kuehl. We reverse and remand for reinstatement of plaintiff's complaint.

In the fall of 1988 plaintiff, a resident of Colorado, purchased two nationally-circulated magazines in which defendants had advertised for sale a 1968 Porsche 911S Targa automobile. In response to the advertisements, plaintiff made a telephone call to Classic in Omaha, Nebraska, at which time Kuehl confirmed the information presented in the advertisements. During the next few weeks plaintiff and Kuehl had a number of telephone conversations regarding the advertised vehicle. Plaintiff then traveled to Omaha and purchased the automobile.

Several months after returning to Colorado, plaintiff discovered that the vehicle he had purchased was not a 911S Targa. Plaintiff thereupon commenced this action, asserting claims for fraud, concealment, negligent misrepresentation, and deceptive trade practices in violation of § 6-1-105, C.R.S., claiming actual and consequential damages on each claim.

Defendants moved to dismiss the complaint on the ground that the court lacked in personam jurisdiction. The court concluded defendants' actions were not expressly directed at causing a harmful effect in Colorado and, therefore, their contacts with this state were insufficient to establish personal jurisdiction. Accordingly, the court granted the motion and dismissed the complaint.

On appeal, plaintiff contends that defendants' fraudulent misrepresentations constitute tortious conduct within Colorado sufficient to confer personal jurisdiction over claims arising from those misrepresentations. We agree.

In determining the existence of personal jurisdiction, a court must engage in a two-tiered inquiry. First, the court must determine whether the long-arm statute, § 13-1-124, C.R.S. (1987 Repl.Vol. 6A), provides a basis for the exercise of jurisdiction. If so, then the court must consider whether the exercise of jurisdiction would violate the due process principles of the federal constitution.

I.

When it dismissed the complaint, the trial court relied on Safari Outfitters v. Superior Court, 167 Colo. 456, 448 P.2d 783 (1969). We are persuaded, however, that later cases have modified the law in Colorado and that, therefore, exercise of jurisdiction was proper here.

Under § 13-1-124(1)(b), C.R.S. (1987 Repl.Vol. 6A), Colorado courts may assert jurisdiction over a nonresident defendant when the cause of action arises from the "commission of a tortious act within this state." For purposes of the long-arm statute, the situs of a "tortious act" is the place where "the last event takes place which is necessary to render the actor liable." Ferrari v. District Court, 185 Colo. 136, 522 P.2d 105 (1974), quoting Gray v. American Radiator & Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961); see D & D Fuller CATV Construction, Inc. v. Pace, 780 P.2d 520 (Colo.1989) ("tortious conduct in a foreign state which causes injury in Colorado may be deemed to be an act committed in Colorado so as to satisfy the long-arm statute").

Here, plaintiff's cause of action is based on the allegation that defendants sent fraudulent misrepresentations into Colorado, through magazine advertisements and telephone conversations with plaintiff, for the intended purpose of inducing him to travel to Nebraska and enter into a contract for the purchase of the automobile.

Although most of plaintiff's damages occurred in Nebraska, where he paid for the automobile and took possession, plaintiff's initial injury occurred when he relied on defendants' misrepresentations and incurred the expense of traveling to defendant's place of business to inspect the vehicle. See Rose v. Franchetti, 713 F.Supp. 1203 (N.D.Ill.1989). For this reason, defendants' deceptive solicitation of plaintiff may be deemed deliberate "tortious conduct within this state" sufficient to establish personal jurisdiction under the long-arm statute. Rose v. Franchetti, supra; Ammon v. Kaplow, 468 F.Supp. 1304 (D.Kan.1979); Brainerd v. Governors of University of Alberta, 873 F.2d 1257 (9th Cir.1989); Lake v. Lake, 817 F.2d 1416 (9th Cir.1987).

As the United States Court of Appeals for the First Circuit observed in Murphy v. Erwin-Wasey, Inc., 460 F.2d 661 (1st Cir. 1972):

"We would be closing our eyes to the realities of modern business practices were we to hold that a corporation subjects itself to the jurisdiction of another state by sending a personal messenger into that state bearing a fraudulent misrepresentation but not when it follows the more ordinary course of employing the United States Postal Service as its messenger.... Where a defendant knowingly sends into a state a false statement, intending that it should there be relied upon to the injury of a resident of that state, he has, for jurisdictional purposes, acted within that state."

II.

Under the due process clause of the Fourteenth Amendment, a court may not make a binding judgment in personam against a nonresident defendant unless the defendant has "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. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 61 S.Ct. 339, 85 L.Ed. 278 (1940).

In making the determination whether a nonresident defendant has sufficient minimum contacts with the forum state, the critical inquiry is whether the relationship among the defendant, the forum, and the litigation is such that the defendant "should reasonably foresee being haled into Court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980).

In D & D Fuller CATV Construction, Inc. v. Pace, supra, our supreme court considered the nature of the due process analysis to be applied where a cause of action arises from the alleged commission of a tort by a nonresident:

"Frequently, the commission of a tort, in itself, creates a sufficient nexus between the defendant and the state so as to satisfy the due process inquiry. In such cases there is no need to further engage in a minimum contacts analysis, because the defendant is so connected with the forum state that traditional notions of fair play and substantial justice are not offended by the state's exercise of jurisdiction.... In addition, a defendant can reasonably foresee being haled into court to answer for his tortious conduct."

Accordingly, under the test set forth in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), "where a defendant's intentional, and allegedly tortious, actions, taken outside the forum, are expressly directed at causing a harmful effect within the forum state, a sufficient nexus exists between the defendant and the state so as to satisfy due process." D & D Fuller CATV Construction, Inc. v. Pace, supra.

Here, plaintiff has alleged that defendants made deliberate, direct and indirect fraudulent misrepresentations for the purpose of inducing him to travel to Nebraska and enter into a contract for the purchase of a vehicle. Moreover, defendants allegedly sold the car to plaintiff with the knowledge that it would be transported to and used in Colorado. Under these circumstances, it would not offend due process principles to subject defendants to suit in this state.

While there is contrary authority in other jurisdictions, see Carothers v. Vogeler, 148 Vt. 316, 532 A.2d 580 (1987), we are persuaded by New Bern Pool & Supply Co. v. Graubart, 94 N.C.App. 619, 381 S.E.2d 156 (1989), aff'd, 326 N.C. 480, 390 S.E.2d 137 (1990), and Marvel v. Pennington GMC, Inc., 98 Or.App. 612, 780 P.2d 760 (1989); and D & D Fuller CATV Construction Inc. v. Pace, supra, that the service was proper here.

As stated in New Bern Pool & Supply Co. v. Graubart, supra:

"Defendant's intentional acts in this case are such that defendant can be said to have purposely availed himself of the privilege of doing business in the state of North Carolina to the extent that defendant should have reasonably anticipated being haled into court in this State. We conclude that defendant had sufficient minimum contacts with the State of North Carolina so as to allow the trial court to exert personal jurisdiction over him and that the maintenance of this action in North Carolina does not offend traditional notions of fair play and substantial justice."

This case should not be confused with Vickery v. Amarillo Freightliner Sales, Inc., 695 P.2d 306 (Colo.App.1984). Although the facts appear to be similar as to the purchase of the vehicle, our court distinguished the issues there by stating:

"Here, the alleged tort relates not to the condition of the truck but rather to the circumstances surrounding the creation of the contract and its terms. The operative fact which is material to the tort is not the fact that there was a breakdown but rather was the defendant's refusal to pay the cost of repairing the truck. Thus, no significance attaches to the place where the breakdown occurred. We therefore find no merit in plaintiffs' argument that the tort was committed here because the truck broke down in Colorado."

The tort in the case before us was allegedly committed by the mailing of advertisements to the plaintiff and the telephone...