Secrest Machine Corp. v. Superior Court, 31599

CourtUnited States State Supreme Court (California)
Citation660 P.2d 399,190 Cal.Rptr. 175,33 Cal.3d 664
Decision Date28 March 1983
Docket NumberNo. 31599,31599
Parties, 660 P.2d 399 SECREST MACHINE CORPORATION, Petitioner, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; Ruben RAMOS, Real Party in Interest. L.A.

James R. Birmingham, Los Angeles, Harold Q. Longenecker, Woodland Hills, Toni Rae Bruno, David Gorney and Chase, Rotchford, Drukker & Bogust, Los Angeles, for petitioner.

No appearance for respondent.

Benjamin F. Card and Dimino & Card, Santa Ana, for real party in interest.

REYNOSO, Justice.

We must decide whether California may constitutionally assert jurisdiction over a nonresident corporation on the basis of activities surrounding the sale of its product for use in California. The assertion is for the limited purpose of adjudicating a claim that a defect in the design or manufacture of the product caused an injury to a California resident.

Real party in interest Ruben Ramos is the plaintiff in an action to recover damages for the loss of five of his fingers which occurred while he operated a leveling machine 1 at his place of employment in Signal Hill, California. The machine was designed and manufactured by petitioner Secrest Machine Corporation. (Secrest) Secrest is not a California corporation and the machine was manufactured outside of this state. Ramos seeks to bring Secrest within the jurisdiction of California courts for purposes of this product liability action because Secrest purposefully sold the machine to his employer, F & S Metals, Inc., a California corporation (F & S), for use in its Signal Hill, California steel plant. Secrest has entered a special appearance and moved to quash service of the summons and complaint for lack of in personam jurisdiction. The trial court found sufficient contacts to give California jurisdiction and denied the motion.

We conclude that the trial court properly may exercise jurisdiction over Secrest for the limited purpose of this lawsuit under section 410.10 of the Code of Civil Procedure and principles set forth in International Shoe Co. v. Washington (1945) 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95; Buckeye Boiler v. Superior Court (1969) 71 Cal.2d 893, 80 Cal.Rptr. 113, 458 P.2d 57; Cornelison v. Chaney (1976) 16 Cal.3d 143, 127 Cal.Rptr. 352, 545 P.2d 264; and Sibley v. Superior Court (1976) 16 Cal.3d 442, 128 Cal.Rptr. 34, 546 P.2d 322.

Secrest is a corporation organized under the laws of the State of Delaware. It maintains its principal place of business in Alexandria, Virginia. Secrest does not regularly maintain any offices, or have any agents, representatives, employees or property in California. The corporation has never applied for authorization to do business in California.

In March 1977, Kenneth Staub, an employee of F & S, traveled to Secrest's Alexandria offices to negotiate the purchase of a leveling machine. Prior to his trip east Staub had viewed two or three leveling machines manufactured by Secrest in operation at the North Atlantic Steel Company in Alameda, California.

Franklin Dees, president of F & S, had heard of Secrest by word-of-mouth and knew it to be one of three or four companies in the U.S. which manufacture machines of the type needed for F & S's business. After Staub returned to California Dees engaged in correspondence and telephone communications with Secrest. During the course of these communications an agreement as to product and price was reached. Dees then prepared, signed and mailed to Secrest an order for the purchase of a type of leveling machine included in Secrest's standard stock, at a price of $115,116.

F & S took delivery of the machine in Virginia. According to Dees, however, there was an oral agreement that his acceptance of the merchandise was conditioned on satisfactory performance in the California plant. Secrest sent an employee to Signal Hill who spent two days assisting F & S in installation of the machine. On September 13, 1977, after the machine was installed and performing to Dees' satisfaction, he signed a security agreement setting forth the financial arrangements between F & S and Secrest. Financing had been arranged through a Maryland corporation which is shown on the Uniform Commercial Code financing statement as the assignee of the secured party, Secrest. Although the contract did not include a maintenance agreement F & S consults Secrest about proper maintenance of the machine and occasionally orders spare parts from Secrest. When considering adapting the leveling machine to accommodate a "slitter" (a device which trims the metal sheets to a specified width) manufactured by another company, F & S asked for and received from Secrest drawings of possible adaptations. Secrest twice sent to F & S circulars advertising special sale prices of certain of its products. Additional evidence submitted by the plaintiff showed that Secrest on six occasions in 1981 placed advertisements in Iron Age, a national trade publication which is distributed in California.

A California court may exercise jurisdiction over nonresidents on any basis not inconsistent with the United States or California Constitutions. (Code Civ.Proc., § 410.10.) The parameters of the states' constitutional powers to compel absent defendants to defend suits brought in state courts has been defined in a series of United States Supreme Court decisions of which International Shoe v. Washington (1945) 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 is the seminal case. Generally, the rule is that the forum state may exercise jurisdiction over a nonresident defendant only where the defendant has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " (International Shoe Co., supra, 326 U.S. at p. 316, 66 S.Ct. at p. 158.) "In determining whether a particular exercise of state-court jurisdiction is consistent with due process, the inquiry must focus on 'the relationship among the defendant, the forum and the litigation.' Shaffer v. Heitner [ (1977) 433 U.S. 186] at 204 [97 S.Ct. 2569, at 2579, 53 L.Ed.2d 683]." (Rush v. Savchuk (1980) 444 U.S. 320, 327, 100 S.Ct. 571, 576, 62 L.Ed.2d 516.)

The high court has said that "the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative.... Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure." (International Shoe Co., supra, 326 U.S. at p. 319, 66 S.Ct. at p. 159.) Thus, where a corporation's activities have been extensive or wide ranging, or substantial, continuous and systematic, they justify jurisdiction for all causes of action asserted against the corporation. (See, Cornelison v. Chaney (1976) 16 Cal.3d 143, 147, 127 Cal.Rptr. 352, 545 P.2d 264; Buckeye Boiler Co. v. Superior Court (1969) 71 Cal.2d 893, 898-899, 80 Cal.Rptr. 113, 458 P.2d 57; Perkins v. Benquet Mining Co. (1942) 342 U.S. 437, 447-448, 72 S.Ct. 413, 418, 96 L.Ed. 485.)

Less extensive activity may support jurisdiction for purposes of a particular cause of action depending upon the nature and quality of the acts, the degree of relation to the asserted cause of action, and the balance between the convenience of the parties and the interest of the state in asserting jurisdiction. (Cornelison v. Chaney, supra, 16 Cal.3d at p. 143, 148, 127 Cal.Rptr. 352, 545 P.2d 264; Hess v. Pawloski (1927) 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091; McGee v. International Life Ins. Co. (1957) 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223; Hanson v. Denckla (1958) 357 U.S. 235, 250-253, 78 S.Ct. 1228, 1237-40, 2 L.Ed.2d 1283.) California has recognized that a state may exercise jurisdiction over one who causes effects in the state by an act or omission done elsewhere with respect to causes of action arising from the effects. This is so unless the nature of the effects and of the individual's relationship to the state make exercise of jurisdiction unreasonable. (Sibley v. Superior Court (1976) 16 Cal.3d 442, 128 Cal.Rptr. 34, 546 P.2d 322; Quattrone v. Superior Ct. (1975) 44 Cal.App.3d 296, 118 Cal.Rptr. 548; see, Judicial Council com. to Code Civ.Proc., § 410.10, 14 West's Ann.Code; Rest.2d Conflict of Laws, § 37.)

In cases where jurisdiction is based on the defendant's occasional activities the United States Supreme Court has said that "... it is essential ... that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." (Hanson v. Denckla, supra, 357 U.S. at p. 253, 78 S.Ct. at p. 1239.) With regard to corporate manufacturers of allegedly defective products this court has "equated engaging in economic activity within this state 'as a matter of commercial actuality' with Hanson 's requirement of purposeful activity within the state." (Buckeye Boiler Co. v. Superior Court, supra, 71 Cal.2d at p. 902, 80 Cal.Rptr. 113, 458 P.2d 57.) In Buckeye Boiler we explained that "whenever the purchase or use of its product within the state generates gross income for the manufacturer and is not so fortuitous or unforeseeable as to negative the existence of an intent on the manufacturer's part to bring about this result" the manufacturer has engaged in economic activity within the state as a matter of commercial actuality. (Id., at p. 902, 80 Cal.Rptr. 113, 458 P.2d 57; see also, Gray v. Am. Radiator & Standard Sanitary Corp. (1961) 22 Ill.2d 432, 176 N.E.2d 761, 766.) We said that jurisdiction based on an isolated use or purchase would be precluded only if the isolated nature of the use "conclusively establishes lack of foreseeability that the product will enter the state...." (Buckeye...

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