Synergetics By and Through Lancer Industries, Inc. v. Marathon Ranching Co., Ltd., 19143
| Decision Date | 19 June 1985 |
| Docket Number | No. 19143,19143 |
| Citation | 701 P.2d 1106 |
| Parties | SYNERGETICS, a Utah Limited Partnership, By and Through its general partner, LANCER INDUSTRIES, INC., a corporation, Addland Enterprises, Inc., Plaintiffs and Respondents, v. MARATHON RANCHING CO., LTD., Hans W. Roeck and John Does 1 through 10, Defendants and Appellants. |
| Court | Utah Supreme Court |
Joel R. Dangerfield, Ronald W. Goss, Salt Lake City, for defendants and appellants.
Ronald C. Barker, Robert L. Lord, Salt Lake City, for plaintiffs and respondents.
Defendants appeal a finding of jurisdiction of the Utah courts over them. They also appeal an order striking their answer and counterclaim and a default judgment entered against them "for failure to submit to discovery and to comply with lawful orders of the Court compelling discovery." We affirm.
Plaintiff Synergetics is a Utah limited partnership whose general partner, Lancer Industries, Inc., is an Illinois corporation. Plaintiff Addland Enterprises, Inc. is a California corporation. Defendant Marathon Ranching Co. (Marathon) is a Canadian corporation whose principal place of business is in Saskatoon, Saskatchewan. Defendant Hans Roeck (Roeck), Marathon's president, is a Canadian citizen whose residence is in California.
On May 23, 1980, negotiations which had been carried on in California and in Canada culminated in the execution of an agreement in Saskatoon, essentially exchanging certain Canadian property owned by Marathon for an ocean going sailboat owned by Addland. 1 Thereafter, any communication regarding the agreement was done by telephone, telegram or letter, with one exception. In March, 1981, Roeck came to Utah with his family. Roeck met with several agents of plaintiffs on social occasions (e.g. family dinners) during that time. Roeck also negotiated, drafted, and signed a revised agreement with Synergetics and Y.M.S. modifying the terms of the May 23, 1980, agreement. The modification substituted a different quarter section of land for that described in the original agreement. It also modified the rights and duties of the parties. The new caveat showing the revised legal description of the exchange land was drawn and recorded in Saskatoon and copies mailed to plaintiffs in Utah.
On March 9, 1983, plaintiffs filed a complaint against defendants in the third district court of Utah. Plaintiffs sought money damages and rescission of the agreement providing for the exchange of the sailboat for the Canadian property. Plaintiffs alleged that the transaction was the product of defendants' fraud, misrepresentations, and deceit.
Defendants responded to plaintiffs' complaint by appearing specially and moving to quash service of summons and to dismiss the complaint for lack of personal and subject matter jurisdiction. The motion was supported by an affidavit of Roeck and a memorandum of points and authorities. Both documents claimed that the entire transaction which was the subject matter of the lawsuit was negotiated and executed outside of Utah, and that defendants had insufficient minimum contacts with Utah for the Utah courts to exercise personal jurisdiction over defendants consistent with due process of law and Utah's Long Arm Statute. U.C.A., 1953, §§ 78-27-22 to -28.
Plaintiffs amended their complaint to allege the contacts upon which they based their claim that long arm jurisdiction could be exercised by Utah courts. These included: telephone calls from Roeck to agents of plaintiffs in Utah; letters from defendants into Utah; a telegram into Utah; and Roeck's March 1982 visit to Utah at which time the modified agreement was negotiated, drafted, and signed.
Defendants again moved to dismiss. The motion was denied by the district court without comment. Defendants then filed a petition for interlocutory appeal with the Utah Supreme Court. The district court stayed all proceedings pending Supreme Court action but ordered that, if defendants' petition was denied, defendants should file an answer to plaintiffs' amended complaint and produce Roeck for deposition in Salt Lake City within five business days thereafter.
On July 22, 1982, this Court denied the petition for interlocutory appeal. Defendants filed an answer to the amended complaint the same day, again raising the defense of lack of personal jurisdiction. Defendants also moved the district court for a protective order on the ground that all of the voluminous corporate books and records requested by plaintiffs were kept and maintained in Canada and that immediate production would be an unreasonable burden. Defendants further asked that Roeck be excused from the ordered deposition on the ground that Roeck was ill in Hawaii and under doctor's orders not to travel.
Plaintiffs responded by moving the district court to strike defendants' answer and award a default judgment. The district court denied plaintiffs' motion for sanctions, ordered production of documents, and ordered Roeck to appear in Salt Lake City for the taking of his deposition no later than August 27, 1982. Defendants produced a few of the documents. Defendants also moved for a later deposition date on the ground of Roeck's continued illness. The district court ordered Roeck to appear for his deposition no later than September 3, 1982, upon pain of sanctions. Roeck appeared for his deposition on September 3. Following a series of questions concerning his personal life, Roeck refused to answer any more questions and left the deposition.
On September 7, Roeck's attorney contacted plaintiffs' attorney to reschedule Roeck's deposition. Plaintiffs refused to reschedule and filed a motion with the district court to strike defendants' answer and enter a default judgment. On November 18, 1982, the court denied plaintiffs' motion but ordered Roeck to appear for his deposition before November 29, 1982. At the time of the order Roeck was out of the United States and out of contact with his attorneys and so did not receive notice of the order. When Roeck did not appear, plaintiffs renewed their motion to strike and for default judgment, which motion the district court granted on December 12.
Defendants objected to the default judgment on the grounds that Roeck had not received notice of the court's order requiring him to appear for deposition and that no hearing had been held on the issue of damages. The court then ordered a hearing held on defendant's objection to the judgment. 2 After the hearing on February 25, 1983, the judge ordered that "judgment may enter for damages upon the filing of appropriate affidavits concerning punitive and actual damages."
On March 14, plaintiffs filed an affidavit of Robert D. Kent, Jr. No counteraffidavit was filed by defendants. Based on Kent's affidavit, plaintiffs were awarded $352,000 in damages for conversion of the sailboat, $100,000 for rental of the boat, $200,000 in punitive damages, and costs. All contracts and agreements between plaintiffs and defendants were rescinded. Defendants did not thereafter object to the judgment.
Defendants appeal, seeking reversal of the judgment primarily on the basis that Utah courts lack personal jurisdiction over defendants.
Plaintiffs in this case do not claim that defendants were "doing business" in this State to such an extent that Utah courts would have general personal jurisdiction over defendants. 3 Plaintiffs do, however, contend that defendants had sufficient minimum contacts 4 with Utah related to this litigation that Utah courts were justified in asserting specific personal jurisdiction over defendants under section 78-27-24(1) of Utah's long arm statute. That section states:
Any person ... whether or not a citizen or resident of this state, who in person or through an agent does any of the following enumerated acts, submits himself, and if an individual, his personal representative to the jurisdiction of the courts of this state as to any claim arising from:
(1) The transaction of any business within this State; ....
"[T]ransaction of business within this state" is defined in section 78-27-23(2) as "[the] activities of a nonresident person, his agents, or representatives in this state which affect persons or businesses within the State of Utah."
In section 78-27-22 of the long arm statute, the legislature set forth its purpose in enacting the statute:
It is declared, as a matter of legislative determination, that the public interest demands the state provide its citizens with an effective means of redress against nonresident persons, who through certain significant minimal contacts with this state, incur obligations to citizens entitled to the state's protection. This legislative action is deemed necessary because of technological progress which has substantially increased the flow of commerce between several states resulting in increased interaction between persons of this state and persons of other states. The provisions of this act, to ensure maximum protection to citizens of this state, should be applied so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of the Fourteenth Amendment to the United States Constitution.
Consistent with that policy declaration, this Court has held that the protection afforded by Utah courts must be extended to the fullest extent allowed by due process of law. 5
Due process requires that before a court can exercise specific personal jurisdiction over a nonresident defendant, the defendant must have had "minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " 6 Defendants' "conduct and connection with the forum State [must be] such that [they] should reasonably anticipate being haled into court there." 7
In order to determine whether the exercise of jurisdiction over a nonresident defendant would offend traditional notions of fair play and substantial justice, this Court has...
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