Schumacher v. IMG Group, LLC, No. 37721-7-II (Wash. App. 7/7/2009)
| Decision Date | 07 July 2009 |
| Docket Number | No. 37721-7-II.,37721-7-II. |
| Court | Washington Court of Appeals |
| Parties | JIM SCHUMACHER, a married man, Appellant, v. IMG GROUP, LLC, a Utah corporation, Respondent. |
Appeal from Pierce County Superior Court. Docket No: 07-2-14554-6. Judgment or order under review. Date filed: 04/11/2008. Judge signing: Honorable Susan K Serko.
Counsel for Appellant(s), Stephanie Bloomfield, Gordon Thomas Honeywell, Po Box 1157, Tacoma, WA, 98401-1157.
Counsel for Respondent(s), James Sanders, Perkins Coie LLP, 1201 3rd Ave Ste 4800, Seattle, WA, 98101-3099.
Brian Matthew Flock, Perkins Coie LLP, 1201 3rd Ave Ste 4800, Seattle, WA, 98101-3099.
UNPUBLISHED OPINION
Jim Schumacher appeals the trial court's orders dismissing his breach of contract action against IMG Group, LLC, for lack of personal jurisdiction or forum non conveniens and awarding IMG attorney fees. We find that the trial court had specific personal jurisdiction over IMG, and we reverse the award of attorney fees to IMG.
IMG is a limited liability corporation incorporated in the State of Utah, with its principal place of business in Utah. IMG was formed to research and develop technologies for use in the building materials industry, including processes and applications for the reinforcement of plastic resins through the use of natural fibers and fillers for plastic composites.
Jim Schumacher is an engineer with expertise in extruded composite materials, which have advantages over vinyl or aluminum for common applications such as window frames, door frames, and other products. When he heard that IMG might have a job opening, he sent his resume to the company and then traveled to Utah at his own expense to interview for the position. On October 31, 2005, IMG hired Schumacher to assist with developing and securing the intellectual property necessary to manufacture certain building materials technologies. IMG also hired Larry Tinker to assist with that development and Gary Feldscher to handle sales and marketing. Tinker and Feldscher live in California. Schumacher signed the contract at his home in Bonney Lake, Washington.
One of Schumacher's obligations under the contract was to assist IMG in establishing ongoing business relationships in the building materials industry. The contract noted that
Employee will be involved in development, re-development, and refinement of those products, methods and advisor and referral sources and customer lists. The Company's success is highly dependent on maintaining and developing referral sources and customer loyalty and satisfaction, much of which is obtained through the person-to-person interaction of those persons and Employee. Employee's services will require personal contact with customers, suppliers, referral sources and others and Employee's personality, courtesy or honesty will result in development of Company good will, which good will is essential for the continued viability and profitability of the Company.
The contract agreed to cover Schumacher's expenses for travelling from his "present home" to Utah every week and added that when IMG required Schumacher's relocation, it would reimburse him for "reasonable moving costs from his current residence to the required Company location." CP at 6-7. The contract further provided that it was to be governed by Utah law and that a Utah district court would have jurisdiction over its enforcement and interpretation.
In June 2006, IMG registered with the Washington State Department of Revenue.
Through Schumacher, IMG purchased building materials and equipment from four Washington companies. Schumacher called on four other Washington companies that produce vinyl extrusion products in an attempt to work out business arrangements on IMG's behalf. In addition, Schumacher tested developmental fiber-reinforced resins for IMG at Washington State University.
He travelled extensively outside of Washington on behalf of IMG as well.
When IMG demanded that Schumacher sign over his interests in various patents for which IMG had applied, Schumacher refused. IMG fired him on September 28, 2007, and after Tinker and Feldscher refused similar demands, the company fired them as well. IMG sued Schumacher, Tinker, and Feldscher in Utah on October 1, 2007. Apparently before being served with that complaint, Schumacher sued IMG on December 4, 2007, in Pierce County Superior Court.1
Schumacher asked the court to find his written employment contract "unenforceable on account of defendant's breach" and for related relief. CP at 3.
Schumacher subsequently answered IMG's Utah complaint without contesting jurisdiction in Utah. IMG did not answer Schumacher's Washington complaint but instead filed a motion to dismiss for lack of personal jurisdiction or on the basis of forum non conveniens. The Pierce County court granted IMG's motion on both grounds and denied Schumacher's motion for reconsideration. The court also awarded IMG attorney fees of $33,876.28 under Washington's long-arm statute, RCW 4.28.185(5).
We review a trial court's dismissal order for lack of personal jurisdiction de novo.
Raymond v. Robinson, 104 Wn. App. 627, 633, 15 P.3d 697 (2001). Where the trial court's ruling is based on affidavits, the plaintiff bears the burden of making only a prima facie showing of jurisdiction. Raymond, 104 Wn. App. at 633; Precision Lab. Plastics, Inc. v. Micro Test, Inc., 96 Wn. App. 721, 725, 981 P.2d 454 (1999). In determining whether a plaintiff has met this burden, we resolve conflicts between the affidavits in the plaintiff's favor. Ochoa v. J.B. Martin & Sons Farms, Inc., 287 F.3d 1182, 1187 (9th Cir. 2002). We take allegations in the complaint as correct for purposes of appeal. Raymond, 104 Wn. App. at 633.
The exercise of personal jurisdiction over a nonresident defendant must be consistent with the due process requirement of the Fourteenth Amendment. Im Ex Trading Co. v. Raad, 92 Wn. App. 529, 534, 963 P.2d 952 (1998). The amount and kind of activities required of the nonresident corporation in the forum state must be such that it is reasonable and just to subject the corporation to the jurisdiction of that state. Im Ex Trading Co., 92 Wn. App. at 534. In Washington, a court may exercise personal jurisdiction over a nonresident defendant by asserting either general or specific jurisdiction. Van Steenwyk v. Interamerican Mgmt. Consulting Corp., 834 F. Supp. 336, 339 (E.D. Wash. 1993); Im Ex Trading Co., 92 Wn. App. at 534. RCW 4.28.080(10) creates general jurisdiction, while RCW 4.28.185 creates specific jurisdiction. See Hein v. Taco Bell, Inc., 60 Wn. App. 325, 328, 803 P.2d 329 (1991); MBM Fisheries, Inc. v. Bollinger Mach. Shop & Shipyard, Inc., 60 Wn. App. 414, 422, 804 P.2d 627 (1991).
General jurisdiction over a nonresident defendant is proper when the defendant's actions in the state are so substantial and continuous that justice allows the exercise of jurisdiction even for claims not arising from the defendant's contacts within the state. Raymond, 104 Wn. App. at 633. RCW 4.28.080(10) authorizes general jurisdiction over a nonresident defendant if the defendant is transacting substantial and continuous business within the state of such character as to give rise to a legal obligation. Im Ex Trading Co., 92 Wn. App. at 535. In making this determination, courts look to the amount, kind, and continuity of activities carried out by the nonresident in Washington. Bartusch v. Oregon State Bd. of Higher Educ., 131 Wn. App. 298, 304, 126 P.3d 840 (2006).
Schumacher asserts that during the course of his employment at IMG, he worked a substantial portion of the time in Washington because IMG never provided him with a workplace elsewhere. He purchased equipment and supplies for IMG from Washington manufacturers, called on Washington companies on IMG's behalf, and tested resins developed by IMG at Washington State University. Because of its registration with the Department of Revenue, IMG paid the State of Washington workers compensation and employment security taxes for Schumacher.
IMG complains that it was surprised to learn of its Washington business license and claims that IMG management did not authorize the registration. Schumacher states in his reply brief that he registered IMG, but the record does not disclose who was responsible. Although IMG also asserts that it has had no dealings with Washington companies and has no office in Washington, the record contains two invoices sent to IMG at Schumacher's Washington address from Washington companies. IMG also claims that because of Schumacher's noncompetition agreement with Mikron, his former employer in Washington, it understood that Schumacher could not represent IMG in Washington. Schumacher's declaration responds that he met with Mikron on IMG's behalf and that the noncompetition agreement was not an issue because IMG was working to supply the company with material and not to compete with it.
Even if these factual disputes are resolved in Schumacher's favor, we conclude that IMG's actions did not constitute the substantial and continuing business in Washington needed to establish general personal jurisdiction over the company. In Raymond, the following contacts were not sufficient: placing advertisements in four national magazines that reach Washington consumers; sending informational materials or otherwise contacting 150 Washington consumers; negotiating terms with Washington residents by phone and mail; selling 10 percent of its units to Washington consumers over five years; distributing a list of past Washington consumers to potential Washington customers; authorizing warranty repairs in Washington; sending a technician to Washington to repair the plaintiff's unit; and orally extending the plaintiff's warranty while the plaintiff was in...
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