Talegen Corp. v. Signet Leasing and Financial Corp.

• Decision Date: 01 September 1994
• Docket Number: No. 1237,1237
• Citation: 657 A.2d 406,104 Md.App. 663
• Parties: TALEGEN CORPORATION f/n/a Crum and Forster Corporation, v. SIGNET LEASING AND FINANCIAL CORPORATION. ,
• Court: Court of Special Appeals of Maryland

Page 663

104 Md.App. 663

657 A.2d 406

TALEGEN CORPORATION f/n/a Crum and Forster Corporation, v. SIGNET LEASING AND FINANCIAL CORPORATION.

No. 1237, Sept. Term, 1994.

Court of Special Appeals of Maryland.

April 28, 1995.

Thomas M. Goss (David H. Hollander, Jr. and Goodell, DeVries, Leech & Gray on the brief), Baltimore, for appellant.

Mark J. Friedman (Susan S. Sands and Piper & Marbury, on the brief), Baltimore, for appellee.

Argued before CATHELL, MURPHY and SALMON, JJ.

SALMON, Judge.

In this case, Signet Leasing and Financial Corporation (Signet), appellee, filed a complaint in the Circuit Court for Baltimore City alleging that Crum and Forster Corporation ¹ (CFC), appellant, had wrongfully breached a computer lease agreement. The Complaint and a Writ of Summons were served upon CFC by mail at its corporate headquarters in New Jersey on January 28, 1993. After appellant's Motion to Dismiss for Lack of Personal Jurisdiction was denied by the lower court (McCurdy, J.), without a hearing or an opinion, appellant filed an answer to appellee's complaint. Following extensive discovery, both parties filed motions for summary judgment. On April 27, 1994, appellant's motion was denied. On the same date, appellee's motion was granted, and the trial court (Gordy, J.) entered a judgment in the amount of $362,000 in favor of appellee. This appeal followed, and appellant has presented us with the following issues:

I. Can an out-of-state Defendant with no contacts with the State of Maryland be made subject to the jurisdiction of the State's courts solely on the basis of monthly rental payments made to a Maryland corporation pursuant to a lease that the Defendant negotiated with an out-of-state third party but which was subsequently assigned to that corporation?

II. Can an Assignee enforce an automatic renewal clause of an equipment lease, when the Assignee failed to give notice required by New York law, and the Lessee gave notice of termination to the Assignee's agent?

Answering appellant's first question in the negative, we shall reverse the judgment entered by the circuit court. We therefore need not reach appellant's second issue.

BACKGROUND

In November of 1984, CFC, a New Jersey corporation, entered into a Master Lease Agreement (Master Lease) with New York based CIS Corporation (CIS). The terms of the Master Lease were to govern any future equipment lease transactions between CFC and CIS.

Section 10 of the Master Lease provided that the Master Lease was assignable, that CFC consented to any assignment, that CFC agreed to provide any documentation or certification necessary to effect any assignment, and that in the event of an assignment, CFC would "send to Assignee as well as [CIS] copies of any notices which are required hereunder to be sent to [CIS]."

Pursuant to the Master Lease, CFC and CIS negotiated Schedule Ref. No. 100237 (the Schedule) in October of 1988 to govern CFC's lease of certain computer equipment from CIS. In December of 1988, CIS assigned the Master Lease to Signet, a Maryland corporation with its principal place of business in Baltimore, Maryland. In accordance with the assignment provision in the Master Lease, CFC acknowledged the Notice of Assignment sent by CIS and began mailing rental payments on the Schedule to Signet in Maryland. On March 24, 1992, CFC notified CIS that it was terminating the lease of computer equipment listed in the Schedule. On August 7, 1992, Signet wrote to CFC, stating that the termination notice should have been sent to Signet. Signet further stated that, inasmuch as it did not receive notice of the termination until July 2, 1992, ² Signet was entitled to four months additional rent at $90,500 per month, for a total of $362,000.

Paragraph Three of Signet's complaint claimed that jurisdiction over CFC was based upon Maryland's Long Arm Statute, Md.Code (1974, 1989 Repl.Vol.), §§ 6-102 and 6-103 of the Courts and Judicial Proceedings Article (CJ). In a memorandum filed in support of their Motion to Dismiss for lack of personal jurisdiction, CFC stated:

The Defendant, Crum & Foster Corporation, ... is a New Jersey Corporation with its principal place of business in New Jersey. CFC is qualified as a foreign corporation only in California and the District of Columbia. It has no charter or license to do business in Maryland; does not do business in Maryland; maintains no bank accounts or telephone listings within the State of Maryland; and has never solicited business or advertised for business in Maryland.

CFC acknowledged that inasmuch as CIS had assigned the Master Lease to Signet, it began sending lease payments on the Schedule to Signet but pointed out that "CFC did not enter into any negotiations with CIS or Signet regarding CIS's decision to assign the Schedule to Signet, nor did CFC have any knowledge that the Schedule would be assigned to a corporation located in Maryland." Appellant further noted that "[a]t no time prior, during or subsequent to the assignment of the Schedule and Lease to Signet has an employee or agent of CFC travelled to Maryland regarding the matter set forth in Signet's complaint."

In response to CFC's motion, Signet said:

CFC's contract with Signet required a continuing performance by CFC of directing monthly payments to Signet in Maryland and the duty of CFC to notify and communicate with Signet with regard to the Computer Equipment. CFC admits that it made payments to Signet in Maryland until September, 1992. This continuing course of contacts from March, 1989 through September, 1992 is sufficient to support an exercise of personal jurisdiction.

I.

The determination of whether an assertion of personal jurisdiction is proper typically involves a two-step process:

[B]efore personal jurisdiction may be asserted under the long-arm statute, it must first be determined whether the statute authorizes the assertion of personal jurisdiction, and, if so, whether the exercise of personal jurisdiction would be consistent with the Due Process Clause of the Fourteenth Amendment.

Mohamed v. Michael, 279 Md. 653, 657, 370 A.2d 551 (1977); Bahn v. Chicago Motor Club, 98 Md.App. 559, 567, 634 A.2d 63 (1993); Jason Pharmaceuticals v. Jianas Bros., 94 Md.App. 425, 430, 617 A.2d 1125 (1993).

At the outset, we note that it is not at all clear whether Maryland's long-arm statute authorizes the exercise of personal jurisdiction in this case. Sections 6-103(a) and (b)(1) read:

(a) Condition.--If jurisdiction over a person is based solely upon this section, he may be sued only on a cause of action arising from any act enumerated in this section.

(b) In general.--A court may exercise personal jurisdiction over a person, who directly or by an agent:

(1) Transacts any business or performs any character of work or service in the State Signet asserted, in its opposition to CFC's Motion to Dismiss, that § 6-103(b)(1) was applicable. As noted infra, Signet's "cause of action" may not have arisen out of CFC's transacting business in Maryland. ³

Although we doubt that CFC's connections with Maryland should be considered "transacting business" in Maryland, we are mindful that this issue is enveloped by the due process issue because, in enacting the long arm statute, the Maryland legislature intended "to expand the exercise of personal jurisdiction to the limits allowed by the Due Process Clause of the Fourteenth Amendment to the United States Constitution." Camelback Ski Corp. v. Behning, 307 Md. 270, 274, 513 A.2d 874 (1986) (Camelback I ), vacated and remanded on other grounds, 480 U.S. 901, 107 S.Ct. 1341, 94 L.Ed.2d 512 (1987), opinion on remand, 312 Md. 330, 539 A.2d 1107 (Camelback II ), cert. denied, 488 U.S. 849, 109 S.Ct. 130, 102 L.Ed.2d 103 (1988); Mohamed v. Michael, supra, 279 Md. 653 at 657, 370 A.2d 551; Geelhoed v. Jensen, 277 Md. 220, 224, 352 A.2d 818 (1976). Thus, in analyzing the issue, we shall look "to but not beyond the outermost limits permitted in this area by the due process decisions of the Supreme Court." Camelback I, 307 Md. at 274, 513 A.2d 874 (quoting Lamprecht v. Piper Aircraft Corp., 262 Md. 126, 130, 277 A.2d 272 (1971)).

II.

The Supreme Court has stated that, in order for personal jurisdiction to attach under the Due Process Clause, a defendant must have "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, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342-43, 85 L.Ed. 278 (1940)); accord Presbyterian University Hospital v. Wilson, 337 Md. 541, 548-49, 654 A.2d 1324 (1995); Camelback I, supra, 307 Md. at 274, 513 A.2d 874.

It is well established that the level of necessary "minimum contacts" varies depending on whether the jurisdiction asserted is general or specific:

[A] holding that a forum may exert general jurisdiction over a party involves a legal finding that a defendant maintains continuous and systematic contacts with the forum which constitute doing business in the forum. [Helicopteros Nacionales de Colombia, S.A. v.] Hall, 466 U.S. at 416 [104 S.Ct. 1868, 1872-73, 80 L.Ed.2d 404 (1984) ].... In contrast, specific jurisdiction involves more of an expanded factual inquiry into the precise nature of the defendant's contacts with the forum, the relationship of these contacts with the cause of action, and a weighing of whether "the nature and extent of contacts ... between the forum and the defendant ... satisfy the threshold demands of fairness." Camelback II, 312 Md. at 336, 539 A.2d at 1110.

Wilson, supra, 337 Md. at 552, 654 A.2d 1324. Therefore, "[g]eneral jurisdiction exists where a party has been 'doing business' generally in the forum state, but the cause of action is not related to those contacts, [and] specific jurisdiction exists where the cause of action arises out...