Walker Management, Inc. v. FHC Enterprises, Inc.
| Decision Date | 24 October 1989 |
| Docket Number | No. C0-89-995,C0-89-995 |
| Citation | 446 N.W.2d 913 |
| Parties | WALKER MANAGEMENT, INC., Respondent, v. FHC ENTERPRISES, INC., Appellant. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
Personal jurisdiction is not proper in Minnesota when the foreign corporation does not initiate the business relationship and does not have sufficient contacts with Minnesota to meet the constitutional minimum required to impose jurisdiction.
Mark R. Miller, David G. Ronald, Hessian, McKasy & Soderberg, Minneapolis, and John M. O'Malley, Winston & Strawn, Chicago, Ill., for appellant.
Alfred H. Edwall, Jr., Timothy P. Mahoney, Robins, Kaplan, Miller & Ciresi, Minneapolis, for respondent.
Heard, considered, and decided by WOZNIAK, C.J., and SCHUMACHER and GARDEBRING, JJ.
The trial court denied appellant's motion seeking dismissal of the complaint for lack of personal jurisdiction and this appeal followed. We reverse.
Appellant FHC Enterprises, Inc. (FHC) is an Illinois corporation engaged in the business of managing The Benchmark Cooperative, a housing project for senior citizens in Hoffman Estates, Illinois, a suburb of Chicago. Respondent Walker Management, Inc. (Walker) is a Minnesota corporation engaged in the business of providing consulting, marketing, and managing services to senior citizen life and health care providers.
The relationship between FHC and Walker began in the summer of 1986 with incidental contact at seminars between Karen Struve, president of Walker, and Michael Gillman, FHC's representative. In August 1986, Struve and Walker's vice president traveled to FHC in Illinois to solicit FHC's business. In March 1987, Struve again returned to FHC's headquarters in Illinois to deliver a written proposal for a marketing agreement and in April 1987, Gillman accepted Walker's proposal in FHC's headquarters. In July 1988, the parties entered into a management agreement which specifically provided that it was to be "governed by and interpreted and enforced" according to Illinois law.
FHC has no offices or staff in Minnesota, has never sent sales representatives into Minnesota, is not registered in Minnesota as a foreign corporation, owns no property in Minnesota, and has never filed Minnesota corporate income tax returns or information returns for the Minnesota Secretary of State.
Walker did not maintain a marketing office in Illinois and is based in Minneapolis, Minnesota. All of Walker's employees with marketing expertise are located in Minnesota, a large portion of the work they completed for FHC was done in Minnesota, and the marketing services were implemented in Illinois.
There were numerous telephone conversations between representatives of FHC and Walker, in addition to correspondence, payments, and other documents which were sent by FHC from Illinois to Walker in Minnesota. In June 1987, two representatives from FHC traveled to Minnesota to view Walker's operations, meet with Walker personnel, and tour Walker properties.
In addition to contracting with Walker, FHC contracted with Harris & West, a Minnesota corporation, from July to October 1988. FHC accepted all of the services in Illinois and never came to Minnesota to negotiate or contract with Harris & West. Three Minnesota vendors, Kosmas Advertising, Inc., General Litho Services, and Allison Sales, had contracts directly with Walker to provide services in connection with The Benchmark (FHC), but FHC had no contracts at anytime with the vendors.
All of the work and proposed work which Walker was to perform for FHC concerned The Benchmark housing project in Hoffman Estates. Walker employees regularly traveled to Illinois and spent extended periods of time in Illinois in connection with The Benchmark. Some Walker employees actually resided in Illinois. No effort was made to market The Benchmark in Minnesota.
On October 6, 1988, the president of FHC wrote to Walker purporting to terminate the marketing and management agreements. FHC filed a complaint against Walker in Illinois alleging a breach of the marketing agreement and Walker subsequently filed an action alleging a breach of the marketing and management agreement in Hennepin County. FHC moved to dismiss Walker's complaint for lack of personal jurisdiction which was denied. This appeal followed.
Were FHC's contacts with Minnesota sufficient to meet the constitutional minimum required to impose jurisdiction?
When reviewing a motion to dismiss for lack of jurisdiction, this court must take as true the facts alleged in plaintiff's complaint and supporting affidavit. Marquette National Bank of Minneapolis v. Norris, 270 N.W.2d 290, 292 (Minn.1978).
Minnesota's long-arm statute provides that a Minnesota court may exercise personal jurisdiction over a foreign corporation if that corporation transacts any business within the state except when Minnesota has no substantial interest in providing a forum extending jurisdiction or the burden placed on the defendant by being brought under the state's jurisdiction would violate fairness and substantial justice. Minn.Stat. Sec. 543.19, subd. 1 (1988).
In interpreting this statute, the courts have stated that the scope of such long-arm jurisdiction should not be extended so that its reach "obliterates state lines and * * * lead[s] to the result that anyone who deals with a Minnesota resident in any way * * * can be brought into the Minnesota courts to respond to a suit." McQuay, Inc. v. Samuel Schlosberg, Inc., 321 F.Supp. 902, 906 (D.Minn.1971).
Due process requires a plaintiff to show that the defendant has had sufficient contacts with a state so that requiring them to defend in the state does not violate 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). To have minimum contacts, the defendant must have purposefully availed itself of the privilege of conducting activities within the jurisdiction. Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). The nonresident must be able to reasonably anticipate being haled into the state's court. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).
The Minnesota Supreme Court adopted the five-factor test set out in Aftanase v. Economy Baler Co., 343 F.2d 187, 197 (8th Cir.1965), to determine whether minimum contacts exist. The test requires the court to evaluate:
(5) The convenience of the parties.
Vikse v. Flaby, 316 N.W.2d 276, 282 (Minn.1982). The first three factors are primary factors and the last two require lesser consideration. Dent-Air, Inc. v. Beech Mountain Air Service, Inc., 332 N.W.2d 904, 907 (Minn.1983).
FHC entered into a contract with Walker in April 1987 and their relationship continued until October 6, 1988, when FHC purported to terminate the relationship. During this one and one-half years, FHC had contact with Walker primarily through the mail, by telephone, and by forwarding of funds, none of which can support a finding of personal jurisdiction. See Mountainaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651 (8th Cir.1982); Aaron Ferer & Sons Co. v. Atlas Scrap Iron & Metal Co., 558 F.2d 450 (8th Cir.1977); Fourth Northwestern National Bank of Minneapolis v. Hilson Industries, Inc., 264 Minn. 110, 117 N.W.2d 732 (1962). FHC employees were present in Minnesota on only one occasion.
Walker contracted with three Minnesota vendors to provide services for FHC. Each of these vendors billed FHC or The Benchmark for some of the services they provided to them, and FHC or The Benchmark paid the vendors through the mail. FHC has not had sufficient quantity of contact with Minnesota to warrant granting jurisdiction.
In essence, Walker is the "seller" of services and FHC is the "buyer" of those services. There is a distinct difference between purchasers of goods and services from Minnesota residents as opposed to sellers of goods and services to Minnesota residents.
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