No. 90-321
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
EDSALL CONSTRUCTION COMPANY, INC.,
Plaintiff and Respondent,
LARRY D. ROBINSON and KRISTEN ROBINSON
doing business as IMPERIAL TILE,
Defendants and Appellants.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Thomas A. Olson, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Michael J. Lilly; Berg, Lilly, Stokes, Andriolo,
Tollefsen & Schraudner, Bozeman, Montana
For Respondent:
Gary L. Walton; Poore, Roth & Robinson, Butte,
Montana
Submitted on Briefs: October 11, 1990
JAN 2 4 1991 Decided: January 24, 1991
~iled: cdSrn& p
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Justice Diane G. Barz delivered the Opinion of the Court.
Plaintiff, Edsall construction Co., brought this action in the
District Court of the Eighteenth Judicial District, Gallatin
County, against defendants, Larry and Kristen Robinson, for damages
arising out of an oral sub-bid contract. The District Court denied
defendants' motions to dismiss for lack of personal jurisdiction,
and after hearing testimony, awarded plaintiff damages in the
amount of $15,114. From that judgment, the defendants appeal. We
reverse.
Edsall is a Montana corporation with its principal place of
business in Bozeman, Montana. Edsall is a general contractor
primarily engaged in the construction or rehabilitation of
buildings.
Larry and Kristen Robinson are husband and wife, and reside
in Parowan, Utah. Larry is the sole proprietor of Imperial Tile
and operates the tile laying business out of his own home.
In July, 1988, Edsall, in preparing a bid on a federal
construction project known as the Rehabilitation of Bryce Canyon
Lodge, had its representatives contact various subcontractors to
solicit bids for the project. The project was located in Bryce
Canyon National Park, Utah and Edsall determined it best to solicit
bids from Utah contractors because of the savings involved in terms
of travel and proximity to the job site.
On July 26, 1988, a- representative of Edsall called the
listing for Imperial Tile in Parowan, Utah to inquire whether
Imperial Tile was planning to submit a bid for the tile work on the
project. Kristen answered the call and informed the representative
neither she nor Larry had any prior knowledge of the project.
Kristen was advised as to where she could receive a copy of the
plans and specifications for the project, and acquired the
documents later that day. When Larry arrived home that evening,
Kristen conveyed the information to him. Larry spent the remainder
of the evening preparing a bid for the tile work and concluded his
preparations after his wife had gone to bed. He left for a job
site early the next morning, July 27, 1988, and left Kristen a note
requesting her to call in a bid of $24,500. Kristen called in the
bid to Edsall as the note instructed on July 27. Wayne Edsall,
president of Edsall Construction, called Kristen back later that
day to find out whether the bid included certain proposed
additions. Subsequent to the conversation with Kristen, Edsall
used Imperial Tile's bid in determining their proposed bid. The
bid opening was held the afternoon of July 27, 1988, in Bryce
Canyon National Park, Utah.
On August 3, 1988, Edsall called Kristen and informed her that
Imperial Tile had been awarded the tile bid for the project. The
following morning, August 4, 1988, Larry called Edsall and spoke
with Edsallts estimator. The estimator advised Larry that there
were two other tile bids, both considerably higher (one for $39,614
and the other for $47,800). Upon learning the amounts of the other
tile bids, Larry felt he must have made a mistake and recalculated
his bid. He testified that his bid should have been closer to
r 1
$42,000. Later that morning, Kristen called Edsall to inform
Edsall that Imperial Tile's bid was a mistake, and that Imperial
Tile could not do the job.
On August 11, 1988, the Bryce Canyon Lodge Rehabilitation
Project was awarded to Edsall as low bidder and Edsall subsequently
entered into a contract with the government on August 16, 1988.
On September 1, 1988, Edsall received a letter from Imperial
Tile confirming Larry's calculation error and refusal to perform.
Edsall eventually subcontracted with the next lowest bidder
($39,614) to perform the tile work on the project. Edsall brought
an action in the above District Court, seeking damages for the
difference between $24,500 and $39,614, or the sum of $15,114.
Trial was held on January 17, 1990 without a jury. The District
Court entered it Findings of Fact and Conclusions of Law on January
31, 1990, and ordered the Robinsons to pay to Edsall the sum of
The dispositive issue presented on appeal is whether the
District Court erred in exercising personal jurisdiction over the
appellants.
Montana's long arm personal jurisdiction statute is found in
Rule 4B of the Montana Rules of Civil Procedure and provides the
essential criteria to determine whether Montana jurisdiction exists
under these circumstances. Under Rule 4B, M.R.Civ.P., personal
jurisdiction can be acquired in two ways, by general jurisdiction
or long arm jurisdiction. When a party is physically present
within Montana or its contacts are so pervasive that it is "found
within the state of Montana,If Montana has general jurisdiction.
Long arm jurisdiction exists when a party exercises any of the long
arm statutes enumerated in Rule 4B(1), M.R.Civ.P.
This Court has consistently utilized a two step process in
analyzing a question of whether personal jurisdiction can be
exercised by Montana courts. May v. Figgins (1980), 186 Mont. 383,
607 P.2d 1132; Simmons v. State (1983), 206 Mont. 264, 670 P.2d
1372 ; Nelson v. San Joaquin Helicopters (1987), 228 Mont. 267, 742
P.2d 447. The first step is to determine whether there exists any
personal jurisdiction, either by way of being "foundw in Montana
or by way of the long arm statutes. If it is determined that such
jurisdiction does not exist, any further analysis becomes
unnecessary. On the other hand, if it is determined that personal
jurisdiction exists by way of the long arm statutes then the second
step requires a determination of whether exercising such
jurisdiction would be commensurate with the defendant's due process
rights. See Nelson at 271, 742 P.2d at 449.
Using the first step to analyze the circumstances presented
at bar, we begin with Rule 4B(1), M.R.Civ.P., which provides:
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;
(d) contracting to insure any person, property or
risk located within this state at the time of
contracting;
(e) 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.
To be llfoundllwithin Montana it is necessary that the
defendants1 activities are llsubstantialll
or llsystematic and
continuous.l1 International Shoe Co. v. Washington (1945), 326 U.S.
310, 66 S.Ct. 154, 90 L.Ed. 95; In Matter of the Estate of Ducey
(1990), 241 Mont. 419, 787 P.2d 749. Imperial Tile's activities
in submitting a bid with Edsall are clearly not sufficient to
satisfy this criteria and invoke general jurisdiction over the
Robinsons.
We then turn to the question of whether long arm jurisdiction
exists. The District Court concluded that Rule 4B(l)(a),
M.R.Civ.P., confers upon Montana courts such jurisdiction. That
section of the statute subjects persons transacting ' n business
ay
within this stateu1 (emphasis added) to Montana long arm
jurisdiction.
This Court stated in Simmons that a nonresident does not
subject himself to the jurisdiction of Montana by merely entering
into a contract with a resident of Montana. Simmons, at 279, 670
P.2d at 1380. The only association Imperial Tile has with Montana
is that it entered into a contract with Edsall, a resident of
Montana. Simmons we also stated that
[ilnterstate communication is an almost inevitable
accompaniment to doing business in the modern world, and
cannot by itself be considered a llcontact"
for justifying
the exercise of personal jurisdiction.
Simmons, at 280, 670 P.2d at 1380. Imperial Tile's "interstate
comm~nication~~ the form of a telephone call to submit a bid on
in
a contract to be entirely performed in another state, does not by
itself constitute the lltrahsaction business within this state1'
of
under Rule 4B(1) (a), M.R.Civ.P., particularly in light of the fact
that Imperial Tile was sought out by Edsall. It was
representatives of Edsall who initiated the contact with Imperial
Tile, and although Imperial Tile was under no obligation to submit
a bid, initial contact had been made and business relations had
commenced at that point.
The contract was to be performed in Utah, the bidding took
place in Utah, and the initial contact was made by Edsall,
soliciting a bid from Imperial Tile, a business located in Utah.
The only tie this suit has to Montana is that it is Edsallls home
state, and that alone does not justify a determination that Montana
is the proper forum for this dispute.
Respondent cites McGee v. Riekhof (D. Mont. 1978), 442 F. Supp.
1276, in support of its argument that Imperial Tile has subjected
itself to Montana jurisdiction. In McGee, a Utah physician
received a telephone call from his Montana patient's wife and,
during the course of the conversation provided medical advice to
the Montana patient, which eventually led to a medical malpractice
claim against the Utah physician. Personal jurisdiction over the
doctor was found to exist in Montana. The long arm jurisdiction
in that case arose out of Rule 4B(1) (b), M.R.Civ.P., which
addresses tort actions. We are not dealing with a tort action in
the case at bar.
We also distinguish this Court's earlier decision in Nelson,
as future guidance for the district courts in personal jurisdiction
matters. In Nelson, the respondent, San Joaquin Helicopters, was
a California corporation not licensed to do business in Montana.
However, this Court found San Joaquin Helicopters subject to the
in personam jurisdiction of Montana. Unlike the case at bar, the
California corporation had on going business dealings with two
different Montana residents. The incident which gave rise to the
lawsuit involved a promissory note that had been passed from the
California corporation to the Montana plaintiff, via a third party
Montana business. All three parties had been involved in
continuing business relations prior to the action being brought.
As we stated in Nelson, the record there indicated the California
corporation's activity was more than 'a few phone calls back and
'
forth between the parties." Nelson at 272, 742 P.2d at 450. The
situation here is simply that, "a few phone calls.11 Although the
phone calls may have amounted to a contract, the contract was to
be performed in Utah and it did not have any nexus with this state
except for the fact that one party was a Montana resident. The
State of Utah is clearly a more appropriate forum for the
litigation of this matter.
We hold that the first step is not satisfied and Montana does
not have either general jurisdiction or long arm jurisdiction over
the Robinsons. Such being the case, our consideration of step two
and the defendants' due process rights becomes unnecessary. The
judgment of the District Court is reversed and the cause is
remanded to the District Court for dismissal of the case.
f
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Justice
We concur:
I w
Justice Fred J. Weber dissents as follows:
While I agree with the majority as to the applicable rules,
I disagree with the application to the facts of this case.
The critical fact which appears to tilt the majority to deny
jurisdiction is that the contract here was Ifto be entirely
performed in another state. I' The majority also emphasizes that the
bidding by the plaintiff took place in Utah. That element did not
involve the defendants. I conclude both of these factors are
irrelevant under the present facts.
We are not dealing with a contract between the plaintiff and
defendant which was performed in Utah. It is essential to note
that the contract between the plaintiff and defendant was never
performed. The contacts between the parties are essentially the
following: 1) entry into a contract over the telephone, with the
plaintiff in Montana and the defendant in Utah; 2) telephone advice
by the defendant from Utah to the plaintiff in Montana that the
defendant would not fulfill his contract.
The contacts between these two parties are basically the same
in both Montana and Utah. The facts demonstrate an uncompleted
contract with the only issues being whether there was in fact a
contract, and a breach by the defendant's failure to perform that
contract. Even in proof at trial, it appears there will be
substantially similar questions whether the case is tried in
Montana or Utah. The plaintiff's witnesses are in Montana and the
defendant's witnesses are in Utah.
The majority opinion distinguishes the present case from
10
Nelson v. San Joaquin Helicopters (1987), 228 Mont. 267, 742 P.2d
447. The majority indicates that in Nelson the court found in
personam jurisdiction. The majority emphasizes that the California
corporation had ongoing business dealings with two different
residents. As I read Nelson I am unable to make the same
distinction. Without intending to do so, I believe the Court has
created a real dilemma as to whether either Montana or Utah has
jurisdiction in the present case. If the contacts in Montana are
not sufficient for the Montana court to claim jurisdiction, I fail
to understand how there will be additional contact in Utah to
assist that court in reaching a conclusion that it should take
jurisdiction. Under the facts of this case, it seems far more
appropriate to conclude that either Montana or Utah can take
jurisdiction because the contacts in each state are substantially
identical.
The procedure used by the majority has caused unnecessary
significant expenses to the parties. The case has been tried and
judgment entered here in Montana. The majority has nullified that
and required the plaintiff to go to Utah and try the same case over
again. Where a case has been tried to judgment, we should not be
so casual in our reversal.
I would affirm the District Court.