No. 86-202
I N THE SUPREME COURT OF THE STATE OF MONTANA
COLUMBIA F A L L S ALUMINUM CO.,
MONTANA ALUMINUM INVESTORS CORP.,
BRACK DUKER AND JAMES BROUSSARD,
P l a i n t i f f s and A p p e l l a n t s ,
D e f e n d a n t and R e s p o n d e n t .
APPEAL FROM: D i s t r i c t C o u r t of t h e E l e v e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of F l a t h e a d ,
T h e H o n o r a b l e L e i f B. E r i c k s o n , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For A p p e l l a n t :
B r o w n i n g , K a l e c z y c , B e r r y & H o v e n ; J. D a n i e l H o v e n ,
Helena, Montana
M u r p h y , R o b i n s o n , H e c k a t h o r n & P h i l l i p s ; C. E u g e n e
P h i l l i p s , K a l i s p e l l , Montana
For R e s p o n d e n t :
M u r r a y , Kaufman, V i d a l & Gordon; John G o r d o n ,
K a l i s p e l l , Montana
S u b m i t t e d on B r i e f s : Sept. 1 8 , 1 9 8 6
Decided: December 9, 1986
Filed: DEC 9 - 1986
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Mr. Justice Fred J. Weber delivered the Opinion of the Court.
Plaintiffs filed a complaint in the Flathead County
District Court of the Eleventh Judicial District, based on a
contract dispute with Hindin/Owen/Engelke, Inc. (HOE). The
District Court dismissed the complaint and an accompanying
temporary restraining order on the grounds that it lacked the
necessary personal jurisdiction over HOE. We affirm.
The issue is whether the District Court erred in dis-
missing plaintiffs' complaint on the grounds that it did not
have personal jurisdiction over HOE.
HOE is an investment banking firm incorporated in the
State of California with offices in California. In Califor-
nia, HOE was approached by plaintiff Duker, a California
resident, regarding his attempt to locate a lender to finance
the purchase of the aluminum reduction facility located in
Columbia Falls, Montana. By contract executed in California,
HOE agreed with Mr. Duker to attempt to locate a lender for
the venture. On two occasions an officer of HOE traveled
from California to Montana to assist prospective lenders in
examination of the Columbia Falls plant. The HOE officer was
present in the state for several hours on each occasion.
HOE maintains it presented to Mr. Duker two funding
commitments from different lenders which met the requirements
of the contract. Both commitments were rejected. On Novem-
ber 21, 1985, HOE filed a complaint for damages for breach of
contract in the Superior Court of California, County of Los
Angeles. On December 9, 1985, plaintiffs filed a complaint
in the District Court for the Eleventh Judicial District of
Montana and on that date the Montana District Court signed a
temporary order restraining HOE from perfecting service on
Columbia Falls Aluminum Co. in the California suit.
On February 5, 1986, the Montana District Court issued
an order dismissing the complaint for lack of personal juris-
diction of HOE and dissolved the temporary restraining order.
On February 24, 1986, the California Superior Court refused
to grant the motion to dismiss of Columbia Falls Aluminum Co.
which subsequently filed an answer and cross complaint in
that proceeding.
Did the District Court err in dismissing Columbia Falls
Aluminum Co. Is complaint on the grounds that it did not have
personal jurisdiction over HOE?
Rule 4B, M.R.Civ.P., states the rule regarding jurisdic-
tion of persons by Montana courts. Specifically pertaining
to this case are Rule 4B(1) (a) and (e), which provide:
(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;
...
(e) entering into a contract for services to
be rendered or for materials to be furnished in
this state by such person;
This Court has set out a test to determine when a Mon-
tana court may exercise jurisdiction over a nonresident
defendant:
(1) Does the nonresident defendant come within the
provisions of Montana's long-arm jurisdiction.
statutes; and (2) would exercise of long-arm juris-
diction over the nonresident comport with tradi-
tional notions of fair play and substantial
justice. (Cites omitted. )
If we find, as a matter of statutory construc-
tion, that the nonresident does not engage in any
of the several activities enumerated in our
long-arm statute, then our analysis ends and we
must decline jurisdiction. However, even if the
nonresident has done something which potentially
confers jurisdiction, we must advance to the due
process component which is ultimately determinative
of the jurisdictional question.
Simmons v. State (Mont. 1983), 670 ~ . 2 d 1372, 1376, 4 0
The District Court applied Rule 4B as well as the two
part test contained in Simmons when it determined that it
would not invoke jurisdiction over HOE. In its analysis of
the transaction of business in Montana by HOE under Rule
4B (1) (a), the District Court's order stated:
HOE has no property in Montana, does not maintain
any offices here, and has no agents or representa-
tives in this state. HOE does not advertise in
Montana or solicit business in this state.
In its analysis of the nature of the contract for ser-
vices to be rendered in this state by HOE under Rule
4B (1)(e), the District Court stated:
Further, the locus of performance of the
contract in question here was California. The
place of performance of a contract is the place
where the obligation being sued upon was to be
performed. Whalen v. Snell, 667 P2d 436 at 437
(Mont. 1983). HOE was engaged to locate lenders
for Plaintiff Duker's venture. The parties' con-
tract was negotiated and executed in California and
HOE'S performance efforts were directed from its
California office. The contract itself states that
it is governed by California law.
The District Court concluded that it did not have per-
sonal jurisdiction over HOE under Rule 4B. Under the Simmons
rule, the analysis could have stopped there. However, the
District Court also considered whether the exercise of
long-arm jurisdiction comported with traditional notions of
fair play and substantial justice and concluded that under
principles of comity and cooperative federalism, the issue
should be tried in the California court. While we agree that
this case can be best resolved in the California court, we do
wish to point out that the Montana court properly had juris-
diction of this matter.
The engagement letter signed with HOE involved a loan
for the operation of the Montana aluminum reduction facility
in Columbia Falls. The collateral for the operating loan was
to be the Columbia Falls facility itself. The HOE represen-
tative made two separate trips to Montana with prospective
lenders in order to assist in the inspection of the Columbia
Falls facilities and also attended business meetings while in
Montana. The Columbia Falls Aluminum Co. was the party
contemplated to benefit from the financing arrangement.
These facts are sufficient to constitute the transaction of
business in the State of Montana by HOE. We therefore con-
clude that the non-resident HOE did engage in sufficient
activities to come within the provisions of the Montana
statutes as described in Simmons.
We are therefore next required to consider whether the
exercise of long-arm jurisdiction comports with traditional
notions of fair play and substantial justice. The District
Court found that HOE owned no property in Montana and did not
maintain Montana offices or have agents or representatives in
Montana. HOE did not advertise or otherwise solicit business
in Montana. No telephone calls were made by HOE to Montana.
The engagement letter was signed in California. HOE was a
California corporation and initially was doing business with
Mr. Duker, a California resident. A majority of the witness-
es to the controversy reside in California. In addition, the
agreement itself stated that the governing law is that of the
State of California. As did the District Court, we therefore
conclude that traditional notions of fair play and substan-
tial justice require a conclusion that the State of Califor-
nia is the better jurisdiction for the trial of the issues in
this case. While it might have been appropriate for the
Montana court to exercise jurisdiction, considerations of
comity persuade us that California should be allowed to
exercise jurisdiction in this dispute. As stated in Simmons,
comity is defined as:
"'not a rule of law, but one of practice, conve-
nience, and expediency' (Mast, Foos & Co. v. Stover
Mfg. Co., 177 U.S. 485, 488, 20 S.Ct. 708, 710, 44
L.Ed. 856). It does not of its own force compel a
particular course of action. Rather, it is an
expression of one state ' s entirely voluntary deci-
sion to defer to the policy of another (Cite omit-
ted). Such a decision may be perceived as
promoting uniformity of decision, as encouraging
harmony among participants in a system of
co-operative federalism, or as merely an expression
of hope for reciprocal advantages in some future
case in which the interests of the forum are more
critical."
Simmons, 670 P.2d at 1385. (Quoting from Ehrlich-Bober & Co.
v. University of Houston (1980), 49 N.Y.2d 574, 404 N . E . 2 d
We affirm the District Court in its dismissal of the
complaint on the grounds that it did not have personal juris-
diction over Hinden/Owen/Engelke, Inc.
We Concur:
Chief Justice
Justices