No. 86-498
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
GERALD NELSON ,
Plaintiff and Appellant,
-vs-
SAN JOAQUIM HELICOPTERS,
Defendant and Respondent.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Thomas Olson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
W. Corbin Howard, Billings, Montana
For Respondent:
Morrow, Sedivy & Bennett; Ed Sedivy, Bozeman, Montana
Submitted on Briefs: May 14, 1987
Decided: September 3 , 1987
Filed: SEP 3 - 1987.
* A
Clerk
Mr. Justice William E. Hunt, Sr. , delivered the Opinion of
the Court.
Gerald Nelson appeals a judgment granting defendant San
Joaquin Helicopters' Motion to Dismiss for lack of in
personam jurisdiction from the Eighteenth Judicial District
Court in Gallatin County.
Reversed and remanded.
The issue on appeal is whether the ~istrictCourt erred
by dismissing Nelson's complaint for lack of in personam
jurisdiction.
In 1983, Nelson needed repairs performed on a
helicopter. He first transported the helicopter to Garlick
Helicopters, Inc. (hereinafter "Garlick") , a Montana
corporation doing business in Hamilton, Montana. Garlick
told him that they could not help him but recommended that he
take the helicopter to San Joaquin Helicopters (hereinafter
San Joaquin) which is a California corporation located in
Delano, California. San Joaquin is not licensed to do
business in Montana. Garlick had previously done business in
California with San Joaquin and others but since January,
1982, Garlick has exclusively done business in the State of
Montana. In 1981, Garlick and San Joaquin had entered into a
contract whereby Garlick would deliver two helicopters and
certain helicopter parts to San Joaquin. Garlick failed to
deliver the parts San Joaquin ordered. San Joaquin admits
making telephone calls from California to Garlick in Hamilton
in an attempt to obtain various helicopter parts after
Garlick moved to Montana. On some occasions, Garlick
forwarded the requested parts to San Joaquin and on other
occasions, Garlick did not. The parts never delivered by
Garlick from 1981 through November, 1983, apparently equaled
or exceeded $10,000.00 in value.
Upon Garlick's suggestion, Nelson did in fact take the
damaged helicopter to San Joaquin, made an agreement in
California for its repair and did inspect it during its
repair there. Subsequently, during the month of November,
1983, Nelson called San Joaquin from his home in Bozeman,
Montana, and began negotiations by telephone with San Joaquin
in California for them to purchase the helicopter because the
cost of repairs was prohibitive. An agreement was reached
sometime in November, 1983, by telephone wherein San Joaquin
would purchase the helicopter for $10,000.00
Following their agreement, Nelson received a telephone
call from San Joaquin informing him that he would be
receiving a promissory note from Garlick who would in turn
pay him the $10,000.00. The facts are disputed as to whether
San Joaquin told Nelson that there would be no problem with
the collectibility of the note; whether Nelson agreed to
accept the note as full payment without recourse to San
Joaquin; and whether Nelson was ever told that San Joaquin
had been attempting to collect the amount they were owed from
Garlick unsuccessfully for the previous two years.
San Joaquin prepared the promissory note which it
forwarded to Garlick. Garlick signed the note. Nelson then
transferred title of the helicopter to San Joaquin and the
$10,000.00 promissory note was given to him by Garlick.
Nelson eventually collected a total of $2,000.00 on the note
from Garlick who now appears insolvent.
On August 7, 1985, Nelson filed a complaint against San
Joaquin. San Joaquin moved the court to dismiss the
complaint for lack of in personam jurisdiction.
Interrogatories were sent and answered and Nelson was granted
leave to amend his complaint to include a negligent
misrepresentation or fraud count.
On September 5, 1986, the District Court granted
respondent's motion to dismiss and Nelson appealed.
Appellant Nelson contends that the District Court abused
its discretion when it dismissed his complaint for lack of in
personam jurisdiction over defendant San Joaquin.
He argues that the following four factors establish that
Montana courts may properly exercise personal jurisdiction
over San Joaquin. First, he claims San Joaquin had a
contractual relationship with a Montana resident, Garlick
Helicopters, for approximately two years prior to entering
the contract which is at the heart of this controversy. He
claims they communicated with Garlick during that time
attempting to obtain performance due under their contract.
Second, Nelson argues his initial repair contract with
San Joaquin was a direct result of the recommendation of
Garlick, a Montana resident.
Third, he argues San Joaquin negotiated and entered into
a contract to purchase the helicopter with Nelson while
Nelson was here in Montana.
Fourth, he argues San Joaquin, by its own initiative,
created a contractual relationship between two Montana
residents, Garlick and Nelson, by arranging for the one
Montana resident to pay off the California resident's debt to
another Montana resident.
He claims these are sufficient minimum contacts with the
State of Montana to warrant a holding of in personam
jurisdiction.
The determination of in personam jurisdiction is a two
step process. First, a determination must be made as to
whether the party comes within the general jurisdiction of
the court or qualifies under the long arm jurisdiction
statutes. Rule 4R (1), M.R.Civ.P., states:
Rule 4B. Jurisdiction of persons. (1) Subject to
jurisdiction. All persons found within the state
of Montana are subject to the jurisdiction of the
courts of this state. In addition, any person is
subject to the jurisdiction of the courts of this
state as to any claim for relief arising from the
doing personally, through an employee, or through
an agent, of any of the following acts:
(a) the transaction of any business within this
state;
(b) the commission of any act which results in
accrual within this state of a tort action;
(c) the ownership, use or possession of any
property, or of any interest therein, situated
within this state;
(dl contracting to insure any person, property or
risk located within this state at the time of
contracting;
(el entering into a contract for services to be
rendered or for materials to be furnished in this
state by such person; or
(f) acting as a director, manager, trustee, or
other officer of any corporation organized under
the laws of, or having its principal place of
business within this state, or as personal
representative of any estate within this state.
Neither party argues that the defendant's activities are
so "substantial" or "systematic and continuous" to constitute
finding defendant within the State so as to subject it to
Montana's general jurisdiction statutes. International Shoe
Co. v. Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90
L.Ed. 95.
Nelson argues that although San Joaquin cannot be found
within the State for general jurisdiction purposes, San
Joaquin is subject to the long arm jurisdictional statutes
under Rule 4B (1), M. R. Civ. P. because it both transacted
business within Montana and was responsible for the accrual
of a tort within the State.
We have previously held that for purposes of a motion to
dismiss the allegations in the complaint must be taken as
true so as not to deny a plaintiff his day in court. Willson
v. Taylor (Mont. 1981), 634 P.2d 1180, 38 St.Rep. 1606. The
allegations in Nelson's complaint are taken as true for
purposes of determining whether jurisdiction lies with this
State. See Jackson v. Kroll, Pomerants and Cameron (Mont.
1986), 724 P.2d 717, 43 St.Rep. 1622. We hold these
allegations are sufficient to establish business transactions
and an action in tort in Montana.
The second step in making a determination of in personam
jurisdiction is to ask whether the exercise of our long arm
jurisdiction would be commensurate with defendant's due
process rights. In Simmons v. State of Oregon (Mont. 1983) ,
670 P.2d 1372, 40 St.Rep. 1650, we adopted the following test
developed by the Ninth Circuit Court of Appeals in Data Disc,
Inc. v. Systems Assoc., Inc. (9th Cir. 19771, 557 F.2d 1280:
1. The non-resident defendant must do some act or
consummate some transaction within the forum or
perform some act by which he purposefully avails
himself of the privilege of conducting activities
in the forum, thereby invoking its laws.
2. The claim must be one which arises out of or
results from the defendant's forum-related
activities.
3. Exercise of jurisdiction must be reasonable.
Simmons, 670 P.2d at 1378.
As we stated in Jackson - Kroll, 724 P.2d at 721, the
v.
examination of the following factors is necessary to
determine what is a reasonable exercise of jurisdiction in
such circumstances:
1. The extent of defendant ' s purposeful
interjection into Montana;
2. The burden on defendant of defending in
Montana ;
3. The extent of conflict with the sovereignty of
defendant's state;
4. Montana's interest in adjudicating the dispute;
5. The most efficient resolution of the
controversy;
6. The importance of Montana to plaintiff's
interest in convenient and effective relief; and
7. The existence of an alternative forum.
See Taubler v. Giraud (9th Cir. 1981), 655 F.2d 991, 994, and
Simmons, 670 P.2d at 1383-1385, 40 St.Rep. at 1661-1664.
We hold that an exercise of in personam jurisdiction
over San Joaquin would not violate its due process rights
under these circumstances.
A review of the record indicates the defendant's
activity cannot properly be summarized by simply stating as
the lower court did, that there were a few phone calls back
and forth between the parties. The defendant's activities
were more extensive and were sufficient to meet the "minimum
contacts" standard required by this Court in Simmons, supra,
in keeping with the federal courts holding on this issue.
Pennoyer v. Neff (1877), 95 U.S. 714, 24 L.Ed 565; World Wide
Volkswagen v. Woodson (1980), 444 U.S. 286, 100 S.Ct. 559, 62
San Joaquin spent from 1981 to 1983 attempting to
collect a debt from Garlick after Garlick moved its
enterprise to Montana. Telephone calls were made to Garlick
in Montana. Garlick shipped parts from time to time to
California. San Joaquin interjected itself into Montana by
its debt collection practices and continuing commercial
relationship with Garlick.
Further the defendant in California did negotiate over
the telephone with Nelson in Montana and eventually agreed to
purchase the helicopter when the helicopter was in California
for repairs. San Joaquin then interjected itself into
Montana by arranging a contractual relationship between
Nelson and Garlick in conjunction with its earlier agreement
with Nelson. Consequently, the defendant was involved in
three different contractual relationships with two different
Montana residents, one of which is the subject of the
underlying controversy.
In applying the Jackson - Kroll, factors to this case
v.
to determine reasonable exercise of jurisdiction we find this
activity indicates a purposeful interjection into Montana by
San Joaquin.
No conflict with the State of California is evident in
exercising jurisdiction over San Joaquin, although there will
be some burden on defendant in defending in Montana.
The State of Montana clearly has an interest in
adjudicating an alleged assignment of a bad debt in a
commercial transaction from one Montana resident to another.
Nelson does not appear to base his claims on the work done in
California on his helicopter but rather bases them on San
Joaquin's alleged failure to pay an assignment of a Montana
bad debt.
Most witnesses, except the owner of San Joaquin, are
located in Montana and it appears Montana would be the most
efficient location for trial.
We therefore hold that the State of Montana may properly
exercise jurisdiction over defendant San Joaquin through
application of its long arm jurisdiction statutes.
Reversed and remanded.
W e Concur:
/ , Y h~ L L - - ~ ~ x
C i e Justlce