Segil v. Gloria Marshall Management Co., Inc.
| Decision Date | 30 June 1983 |
| Docket Number | Civ. No. C82-0561A. |
| Citation | 568 F. Supp. 915 |
| Parties | Adrien SEGIL and Connie Segil, Plaintiffs, v. GLORIA MARSHALL MANAGEMENT CO., INC., Allan Bergendahl, Gloria Marshall Bergendahl, and James Mallen, Defendants. |
| Court | U.S. District Court — District of Utah |
Gary F. Bendinger, Patricia Metzger, Jon V. Harper, Stephen T. Hard, Giauque & Williams, Salt Lake City, Utah, for plaintiffs.
Thomas A. Quinn, Salt Lake City, Utah, for defendants.
Plaintiffs entered into an agreement with Gloria Marshall Management Company (GMMC) to oversee the establishment of and provide training and management for Gloria Marshall Salons in Australia. The agreement provided that GMMC would make certain installment payments to plaintiffs beginning October, 1981, after plaintiffs had completed their work in Australia and returned to Utah. Plaintiffs allege that such payments have not been made and hence the agreement has been breached. The complaint also alleges that the individual defendants made certain misrepresentations, that all defendants have been unjustly enriched, and that plaintiffs are entitled to an accounting and specific performance of the agreement. The individual defendants are officers and directors of GMMC.
On March 31, all the Gloria Marshall Salons were sold, leaving GMMC with no assets and no income. However, by stipulation the sum received by Gloria Marshall Bergendahl from the sale of the assets of GMMC is directly subject to the claims of the plaintiffs in the instant case, without the necessity of establishing individual or alter-ego liability against Allan or Gloria Bergendahl.
Defendants have filed a motion to dismiss for lack of personal jurisdiction, pursuant to F.R.Civ.P. 12(b)(2), or in the alternative for change of venue for the convenience of witnesses and in the interests of justice, pursuant to 28 U.S.C. § 1404(a). At a hearing held March 7, 1983, plaintiffs moved to dismiss the complaint against James Mallen without prejudice, which motion was granted by the court. The only questions presently before the court are (I) whether this court has personal jurisdiction over GMMC, Gloria Marshall Bergendahl, and Allan Bergendahl; and (II) whether this case should be transferred to the Central District of California for the convenience of witnesses and in the interests of justice.
When presented with a challenge to personal jurisdiction, plaintiffs have the burden of showing the existence of such jurisdiction. However, plaintiff need only make a prima facie showing of jurisdiction and then the burden shifts to the defendants to rebut that showing. The court must construe the affidavits and pleadings most strongly against the moving party, with conflicts resolved in favor of plaintiffs.
In a diversity case such as this one, personal jurisdiction in United States District Court depends upon the jurisdiction of the state in which the court is located. Like most states, Utah asserts its personal jurisdiction over non-resident defendants on the basis of either general jurisdiction when the defendants have had a continuous course of doing business in the state, or specific jurisdiction under a long-arm statute when the defendants have had certain minimum contacts with the state out of which the cause of action arose. Abbott G.M. Diesel, Inc. v. Piper Aircraft Corp., 578 P.2d 850, 853, n. 6 (Utah 1978); Roskelly & Co. v. Lerco, Inc., 610 P.2d 1307, 1309 (Utah 1980). If the plaintiff establishes general jurisdiction under the doing business concept, the forum may assert jurisdiction over claims unrelated to the forum contacts as well as over claims arising out of such contacts. If the defendant has only minimum contacts with the forum, the court may assert personal jurisdiction only on claims arising out of the defendant's forum state contacts. Abbott G.M. Diesel, supra. Of course, activities performed on behalf of a non-resident defendant by its agents or employees within the forum may be used to establish jurisdiction over the defendant. See, Producers Livestock Loan Co. v. Miller, 580 P.2d 603, 605-06 (Utah 1978).
Following are the relevant jurisdictional facts which the court has examined in light of the principles stated above.
1. GMMC is a California corporation headquartered in Downey, California.
2. GMMC, which now has no assets or income, is not currently doing business in Utah.
3. From at least 1972 until March 31, 1982, GMMC provided management, accounting, and training services to Gloria Marshall Figure Control Salons of Utah, Inc. (GM-Utah), a Utah corporation which operated seven salons in Utah. GMMC provided employees to the salons, paid them, trained them, made expenditures for the salons, determined policies, provided management assistance, etc. Indeed, until 1978 plaintiff Connie Segil was an employee of GMMC who supervised all of the salons in Utah. GMMC had a bank account at Zion's First National Bank through which it paid the employees and made other expenditures for the salons. The signatures authorized for this account were those of Gloria Marshall Bergendahl, Allan Bergendahl, and James Mallen.
4. Gloria Bergendahl and Allan Bergendahl were officers and directors of GM-Utah as well as of GMMC.
5. GMMC was wholly owned by Gloria Bergendahl. GM-Utah was wholly owned by GMFC, Inc., a California corporation which was wholly owned by Gloria Bergendahl.
6. Gloria Bergendahl has personally been in Utah for grand openings of salons and to make television commercials for the salons, among other things.
7. Neither Gloria Bergendahl nor Allan Bergendahl have conducted any personal business in Utah outside their activities for the corporations.
8. Gloria Bergendahl contacted plaintiffs in Utah to induce them to go to Australia temporarily to oversee the opening of salons there. After plaintiffs were in Australia they negotiated and executed the contract that is the subject of this action. Gloria Bergendahl, for GMMC, executed the agreement in California.
9. The agreement provides that the installment payments beginning in October, 1981, were to be paid to plaintiffs in Utah.
10. The agreement provides that it is to be construed under the laws of California.
Based upon these facts and the principles of law stated supra, the court concludes that it has personal jurisdiction over GMMC and Gloria Bergendahl, but not over Allan Bergendahl.
1. Jurisdiction over GMMC. It is clear from the facts outlined above that GMMC has carried on continuous and substantial business activities in Utah, thus subjecting it to the general jurisdiction of this forum. It literally ran the Gloria Marshall Salons in Utah. The employees of the salons were GMMC employees, paid from GMMC funds. The accounting and financial affairs of the salons were handled by GMMC. Connie Segil, who was the supervisor of the salons until 1978, was an employee of GMMC and made telephone calls to Gloria Marshall Bergendahl personally at least once a week to report their progress. Under these circumstances, GMMC was doing business in the state at the time the claim in this case arose, and thus it is subject to the jurisdiction of this forum for any claim arising while it was doing business, regardless of whether the claim arose out of the corporation's activities in Utah.
2. Jurisdiction over Gloria Marshall Bergendahl. It appears that the only contacts of Gloria Marshall Bergendahl with Utah were in connection with her duties for either the California corporation or the Utah corporation. Under what some courts have called the fiduciary shield doctrine, an officer and employee of a corporation may not be subject to the personal jurisdiction of a state solely on the basis of her activities in that state on behalf of the corporation which subject the corporation to the jurisdiction of the state. Wilshire Oil Co. v. Riffe, 409 F.2d 1277, 1281 n. 8 (10th Cir. 1969). However, the United States District Court for the Southern District of...
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