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Cramer v. Wade (8/13/99) sp-5155
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Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of the
Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone (907)
264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
ROBERT J. CRAMER, )
) Supreme Court No. S-8140
Appellant, )
) Superior Court No.
v. ) 3VA-93-157 CI
)
RICK WADE, individually and ) O P I N I O N
d/b/a R & R DIVING, )
)
Appellee. ) [No. 5155 - August 13, 1999]
)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Valdez
William J. Bonner, Judge pro tem.
Appearances: Jeffrey P. Stark, Delaney,
Wiles, Hayes, Gerety, Ellis & Young, Inc., Anchorage, for
Appellant. John C. Wendlandt, Walker Walker Wendlandt & Osowski,
LLC, Anchorage, for Appellee.
Before: Matthews, Chief Justice, Fabe, and
Bryner, Justices. [Eastaugh and Carpeneti, Justices, not
participating.]
BRYNER, Justice.
I. INTRODUCTION
Alaska resident Rick Wade loaned money to TSO and Kokua,
Inc., two companies embarking on a business venture in California.
He acted in part based on information that he had received from
Kokua president Robert J. Cramer, a California resident. In return
for Wade's loan, Cramer signed a note on behalf of Kokua promising
repayment within ninety days. But when the note went unpaid, Wade
filed suit in Alaska against Cramer, Kokua, TSO, and others and
obtained a default judgment. The superior court denied Cramer's
motion to set the judgment aside for lack of personal jurisdiction.
We affirm, concluding that Cramer's contacts with Alaska satisfy
minimum due process requirements, that his status as Kokua's
president affords him no shelter from personal jurisdiction, and
that he has failed to prove any other substantial injustice.
II. FACTS AND PROCEEDINGS
Kokua, Inc., is a Nevada corporation. Robert Cramer, its
president, and Frank Watkins, its secretary, are Kokua's sole
shareholders. At all times relevant to this case, Cramer and
Watkins were residents of California. Neither has ever been to
Alaska. In early 1992, Kokua's only substantial asset was a
contract to purchase a certain mining interest near Susanville,
California; Kokua was attempting to close on its contract.
At about the same time, an unrelated California business
venture named TSO was attempting to develop a truck stop near
Tracy, California. TSO needed about $135,000 in short-term
financing to launch the project. Vince Estelle, a TSO partner,
mentioned the project to Cramer, a business acquaintance, offering
him an equity interest in the truck stop in return for help in
financing. Estelle also heard from an associate that Rick Wade --
a resident of Valdez, Alaska -- might be interested in investing.
He contacted Wade to discuss the project. In late February 1992,
Estelle spoke again with Cramer, saying that he had arranged a
$135,000 loan from Wade but needed someone to guarantee payment of
the note. Estelle offered Cramer an equity interest in the truck
stop in return for the guarantee.
Cramer later spoke with Watkins about the truck stop
project and about Estelle's proposition. Cramer and Watkins were
interested in the project, and both thought that Estelle's
proposition was attractive. But neither wanted to risk personal
exposure for such a large amount of money, so they decided to have
Kokua act as the guarantor.
On February 28, 1992, Cramer, Watkins, and Estelle met at
Watkins's office in Campbell, California, and telephoned Wade in
Alaska to discuss the financing behind the truck stop project.
Though Cramer and Wade dispute the details of the conversation, it
is undisputed that the purpose of the call was to encourage Wade to
make the loan, that Cramer spoke with Wade, and that they discussed
the financial soundness of the truck stop project.
That same day Cramer also had Estelle fax various
documents to Wade regarding Kokua that tended to show that the
company was on firm financial ground. After speaking with Cramer,
Wade decided to go through with the loan. On March 3, 1992, Wade
received a faxed copy of a promissory note signed by TSO partners
Estelle and Rick Peters, as well as by Cramer and Watkins, on
behalf of Kokua. The note named TSO and Kokua as payees and
promised to pay Wade $135,000, plus monthly interest of three
percent, by June 3, 1992. Wade also received a fax from Cramer
indicating:
I am instructing our escrow officer to retire
our note to you dated Mar. 3, 1992, at the close of the Escrow.
You will be [paid] $135,000.00 princip[al] plus $12,150.00 in
interest for a total of $147,150.00 directly from Cal-Seria [sic]
Title Co.
By telephone from Valdez, Wade then directed a wire transfer of the
loan funds to TSO's bank account in California.
TSO subsequently lost its financing for the truck stop,
and Kokua also lost its contract to purchase mining rights.
Neither repaid the promissory note to Wade.
In November 1993 Wade filed an action in Valdez to
collect on the note. He named as defendants Kokua, TSO, Cramer,
Watkins, Estelle, and Peters. The complaint stated claims for
debt, breach of contract, and fraud and misrepresentation; it
sought both compensatory and punitive damages. The superior court
entered a default judgment against all defendants on May 8, 1995.
Shortly after Wade attempted to collect on the note in California,
Cramer, Watkins, and Kokua moved under Alaska Civil Rule 60(b)(4)
to set aside the default judgment as void for lack of personal
jurisdiction. After considering affidavits filed by the parties,
the court declined to set the judgment aside, finding adequate
grounds for personal jurisdiction. Cramer appeals this judgment.
[Fn. 1]
III. DISCUSSION
A. Cramer Established Minimum Contacts with Alaska to
Satisfy Due Process Requirements for Personal Jurisdiction.
Civil Rule 60(b)(4) allows courts to grant relief from
any judgment that is void. A judgment is void if the court that
rendered it lacked personal jurisdiction over the defendant. [Fn.
2] Cramer contends that Alaska lacked personal jurisdiction over
him because Wade's claim falls outside the scope of AS 09.05.015,
Alaska's long-arm statute. Wade responds that the court had
personal jurisdiction under subsections (a)(3), (a)(4)(A), and
(a)(5)(D) of the long-arm statute.
Alaska Statute 09.05.015(a)(3) gives Alaska courts
personal jurisdiction "in an action claiming injury to person or
property in or out of this state arising out of an act or omission
in this state by the defendant." Construing this provision in
Kennecorp Mortgage & Equities, Inc. v. First National Bank of
Fairbanks, [Fn. 3] we recognized that failing to pay monetary
obligations owed to an Alaska creditor is an "omission in this
state"causing "injury to property."[Fn. 4] Moreover, AS
09.05.015(a)(4)(A) "applies in an action claiming injury to person
or property in this state arising out of an act or omission out of
this state when the defendant carried on solicitation or service
activities"in this state. Here, Cramer's active solicitation of
a loan from Wade by calling him in Valdez and his alleged acts of
misrepresentation during the course of their interactions arguably
would place Wade's claim within subsection (a)(4)(A) even if the
injury to Wade were viewed as resulting from Cramer's acts or
omissions outside Alaska. [Fn. 5] Finally, subparagraph (a)(5)(D)
of the long-arm statute confers personal jurisdiction in an action
that "relates to goods . . . or other things of value shipped from
this state . . . on the order or direction of the defendant." In
Kennecorp Mortgage we indicated that this provision would allow
jurisdiction over an out-of-state party receiving funds from an
Alaska resident. [Fn. 6]
Cramer nevertheless raises specific challenges to each of
Wade's long-arm theories, insisting that subsections (a)(3),
(a)(4)(A), and (a)(5)(D) are inapplicable. But even if they had
merit, Cramer's specific long-arm challenges would not be
determinative. In Glover v. Western Air Lines, Inc., [Fn. 7] we
expressly construed Alaska's long-arm statute to confer
jurisdiction "to the maximum extent permitted by due process under
the federal constitution."[Fn. 8] And more recently, in Alaska
Telecom, Inc. v. Schafer, [Fn. 9] we reinforced Glover by
recognizing that in allowing personal jurisdiction on "any other
grounds provided by common law,"our long-arm statute's catch-all
subsection (c) extends to any case falling outside the statute's
other subsections "in which the exercise of jurisdiction is
permissible under the Fourteenth Amendment."[Fn. 10]
Thus, reduced to its essence, Cramer's argument requires
us to decide whether the Due Process Clause of the Fourteenth
Amendment forbids an Alaska court to maintain personal jurisdiction
over him. To answer this question we must consider the extent of
Cramer's contacts with Alaska and the basic fairness of requiring
him to appear in its courts: "[D]ue process analysis asks two
questions: first, whether minimum contacts exist; second, whether
maintenance of the suit is consistent with traditional notions of
fair play and substantial justice."[Fn. 11]
Here, Cramer had no ongoing ties to Alaska. But his
limited contacts with Wade will nonetheless satisfy due process
requirements if "they are substantial enough that [he] could
reasonably anticipate being haled into court in [Alaska]."[Fn. 12]
Under the test established by the United States Supreme Court in
Burger King Corp. v. Rudzewicz, [Fn. 13] Cramer could reasonably
anticipate being sued in Alaska if he "'purposefully directed' his
activities at residents of the forum, and the litigation results
from alleged injuries 'that arise out of or relate to' those
activities."[Fn. 14]
Cramer's contacts are sufficient for personal
jurisdiction under this test. Cramer's argument that his telephone
calls alone could not establish personal jurisdiction is
unpersuasive, for it overlooks the totality of the conduct that
Cramer engaged in. [Fn. 15] Cramer purposefully directed his
activities at a resident of Alaska by telephoning and transmitting
documents to Wade in Valdez, actively encouraging Wade's
participation in the truck stop loan, pledging Kokua's assets to
guarantee the loan's repayment, signing the promissory note of
March 3, 1992, and sending Wade written confirmation that he had
arranged direct repayment to Wade by Kokua's escrow officer. And
Wade's suit against Cramer relates to and arises directly out of
these contacts.
Under analogous circumstances, we commented in American
National Bank v. International Seafoods:
This is not a case of [a nonresident
defendant] passively standing by . . . . Rather, this is a case
where the [defendant], knowing that its direct assurance to an
Alaskan [resident] would be necessary in order to effectuate a
commercial inter-state transaction, directly contacted the Alaskan
[resident]; . . . and [made assurances of payment].[ [Fn. 16]]
Our comment in American National applies here.
B. The "Corporate Shield"Doctrine Does Not Preclude Finding
Personal Jurisdiction over Cramer.
Cramer nevertheless contends that he could not reasonably
expect to be personally sued in Alaska because, throughout the
transaction, he acted solely in his corporate capacity as Kokua's
president. In so contending, Cramer asserts the "corporate shield"
doctrine, which establishes "that a corporate officer or agent who
has contact with the forum state only with regard to the
performance of corporate duties does not thereby become subject to
jurisdiction in his or her individual capacity."[Fn. 17]
But Cramer's own pleadings belie his assertion that he
dealt with Wade exclusively as Kokua's corporate agent. The
affidavits and documentary evidence that Cramer submitted establish
that he and Watkins were Kokua's only shareholders and its
principal officers. Before this transaction, the company did not
actively do business guaranteeing loans; its sole significant asset
was a contract to buy mining interests. According to Cramer
himself, his involvement in the loan transaction grew out of his
connection with Estelle. Nothing in Cramer's affidavit suggests
that Estelle contacted Cramer in his corporate capacity. To the
contrary, Cramer's and Watkins's affidavits suggest that Estelle
first communicated TSO's proposal to Cramer personally; Cramer then
passed the information on to Watkins; both men viewed the offer as
"interesting"and "attractive"but were reluctant to risk personal
exposure to a $135,000 loss; accordingly, they decided to handle
the guarantee through Kokua.
In our view, this series of circumstances gives rise to
a reasonable inference that in deciding to participate in Estelle's
venture, in channeling the transaction through Kokua, and in
subsequently encouraging Wade to go through with the loan, both
Cramer and Watkins acted primarily, if not exclusively, to further
their own interests, not those of Kokua.
In any event, under a proper due process analysis it is
entirely beside the point whether Cramer acted for himself or
solely in his corporate capacity as Kokua's president. The only
relevant point is that Cramer himself -- in whatever capacity he
acted -- engaged in significant contacts with Alaska. In Calder v.
Jones, [Fn. 18] the United States Supreme Court held, in
determining whether a state offended due process by asserting
personal jurisdiction over individuals who had acted in a corporate
setting, that "[e]ach defendant's contacts with the forum State
must be assessed individually."[Fn. 19] And in Calder's companion
case, Keeton v. Hustler Magazine, Inc., [Fn. 20] the Supreme Court
explained that Calder, by so holding, rejected "the suggestion that
employees who act in their official capacity are somehow shielded
from suit in their individual capacity."[Fn. 21]
Regardless of whether he purported to act individually or
in his corporate capacity, Cramer personally engaged in almost all
of the significant contacts that could justify personal
jurisdiction over either Kokua as a corporate entity or over Cramer
as an individual. Considering Cramer's individual contacts with
Alaska, we conclude, in light of these circumstances, that even if
he could be deemed to have acted exclusively in his corporate
capacity, due process would not shield him from suit in his
individual capacity.
C. Cramer's Potential Merit Defenses Do Not Preclude
Personal Jurisdiction.
Cramer further argues that there can be no basis for
asserting personal jurisdiction here because his affidavits
conclusively negate the claims of fraudulent misrepresentation that
Wade levels against him personally, and unequivocally establish
that he never personally promised to repay the loan -- that only
Kokua guaranteed repayment. Cramer insists that, at most, Wade's
affidavits conflict with his own, raising genuine factual issues
concerning the existence of jurisdiction that the superior court
should not have resolved without first holding a hearing. [Fn. 22]
But while these arguments raise potential defenses, they
have no bearing on our jurisdictional ruling. As should be clear
from our discussion above, our conclusion that Cramer's contacts
suffice to establish personal jurisdiction does not assume the
truth of Wade's assertions. Instead, we have predicated our
jurisdictional ruling on facts that are undisputed. To the extent
that Cramer's evidence casts doubt on the underlying merits of
Wade's claims, it is foreclosed by the default judgment.
D. Personal Jurisdiction over Cramer Comports with Fair Play
and Substantial Justice.
Having concluded that Cramer's contacts with Alaska
satisfy the minimum contacts requirement of due process, we turn to
the second part of the due process analysis, which entails a
broader inquiry into fairness:
After it has been determined that a defendant
purposefully established minimum contacts within the forum state,
these contacts may be considered in light of other factors to
determine whether the assertion of personal jurisdiction would
comport with fair play and substantial justice.[ [Fn. 23]]
Cramer bears the heavy burden of establishing basic unfairness:
[W]here a defendant who has purposefully
directed his activities at forum residents seeks to defeat
jurisdiction, the defendant must present a compelling case that
certain considerations render jurisdiction unreasonable.[ [Fn. 24]]
Cramer asserts that his lack of ties to Alaska would
render a defense in this state "obviously inconvenient and
unreasonable." But conclusory assertions of this kind do not
amount to a compelling showing:
[B]ecause "modern transportation and
communications have made it much less burdensome for a party sued
to defend himself in a State where he engages in economic
activity,"it usually will not be unfair to subject him to the
burdens of litigating in another forum for disputes relating to
such activity.[ [Fn. 25]]
We have already expressly rejected Cramer's claim of
insubstantial contacts with Alaska and have held that he should
reasonably have anticipated being haled into an Alaska court.
Moreover, Cramer is now a Utah resident; Kokua is a Nevada
corporation; and TSO and other defendants are located in
California. Given these circumstances, no other forum presents
obvious advantages. Because we see no compelling reason why
jurisdiction would not comport with fair play and substantial
justice, we hold that Cramer has failed to carry his burden.
IV. CONCLUSION
Because we conclude that Cramer has established minimum
contacts with Alaska and has failed to prove that jurisdiction in
this state would violate fair play and substantial justice, we
AFFIRM the superior court's order denying Cramer's motion to set
aside the judgment as void for lack of personal jurisdiction.
FOOTNOTES
Footnote 1:
Kokua did not appeal. Watkins did appeal, but subsequently
notified this court that he had filed for bankruptcy in California.
Although federal courts conflict on the issue, the majority rule
appears to be that in a proceeding originally filed against the
debtor, any pending appeal, whether by the plaintiff or
debtor/defendant, is automatically stayed by virtue of 11 U.S.C.
sec. 362(a)(1). See, e.g., Farley v. Henson, 2 F.3d 273, 275 (8th
Cir. 1993) (section 362 applicable to appeal by defendant/debtor);
Ingersoll-Rand Fin. Corp. v. Miller Mining Co., 817 F.2d 1424, 1426
(9th Cir. 1987) (same); Commerzanstalt v. Telewide Sys., Inc., 790
F.2d 206, 207 (2d Cir. 1986) (same); Marcus, Stowell & Beye Gov't
Sec., Inc. v. Jefferson Inv. Corp., 797 F.2d 227, 230 n.4 (5th Cir.
1986) (same); Cathey v. Johns-Manville Sales Corp., 711 F.2d 60,
61-63 (6th Cir. 1983) (same); Association of St. Croix Condominium
Owners v. St. Croix Hotel Corp., 682 F.2d 446, 447-49 (3d Cir.
1982) (same). But see In re Lyngholm, 24 F.3d 89, 91-92 (10th Cir.
1994); see also Southern Bank & Trust Co. v. Harley, 368 S.E.2d
908, 909 (S.C. 1988) (stay does not prevent debtor from petitioning
for appellate review); Greenspoint Palms Ltd. v. Greenspoint Co.,
795 S.W.2d 219, 220 (Tex. App. 1990) (same). For the reasons
stated by the Ninth Circuit in Ingersoll-Rand, 817 F.2d at 1426, we
find the majority rule preferable; we therefore deem Watkins's
appeal stayed and decline to consider it. Because neither party
has addressed the conflicting case law, however, we limit our
ruling to the present case.
Footnote 2:
See Kennecorp Mortgage & Equities, Inc. v. First Nat'l Bank of
Fairbanks, 685 P.2d 1232, 1236-37 (Alaska 1984) (quoting Holt v.
Powell, 420 P.2d 468, 471 (Alaska 1966)); Aguchak v. Montgomery
Ward Co., Inc., 520 P.2d 1352, 1354 (Alaska 1974). Whether a
judgment is void is a question of law that we review de novo. SeeKennecorp, 685 P.2d at 1236. The "burden of demonstrating want of
jurisdiction or a denial of due process"falls on the moving party.
See Aguchak, 520 P.2d at 1354; see also Kennecorp, 685 P.2d at 1237
("Unless appellants can show that this case satisfies one or more
of those conditions [for a void judgment], they cannot prevail on
their Rule 60(b)(4) attack.").
Footnote 3:
685 P.2d 1232 (Alaska 1984).
Footnote 4:
Id. at 1238; accord Fairbanks Air Serv., Inc. v. Air
Operations Int'l Corp., 378 F. Supp. 1405, 1406 (D. Alaska 1974).
Footnote 5:
See Jonz v. Garrett/Airesearch Corp., 490 P.2d 1197, 1199
(Alaska 1971) ("The occurrence of an injury in Alaska allegedly
caused by an act or omission by a defendant outside of Alaska is
itself a contact with Alaska.").
Footnote 6:
See Kennecorp, 685 P.2d at 1238.
Footnote 7:
745 P.2d 1365 (Alaska 1987).
Footnote 8:
Id. at 1367.
Footnote 9:
888 P.2d 1296 (Alaska 1995).
Footnote 10:
Id. at 1299 (quoting AS 09.05.015(c)).
Footnote 11:
Alaska Telecom, 888 P.2d at 1300; see also Glover, 745
P.2d at 1367.
Footnote 12:
Glover, 745 P.2d at 1367, quoted in Alaska Telecom, 888 P.2d
at 1300.
Footnote 13:
471 U.S. 462 (1985).
Footnote 14:
Id. at 472 (citations omitted), quoted in Alaska Telecom, 888
P.2d at 1300.
Footnote 15:
In support of this argument, Cramer cites Wessels, Arnold &
Henderson v. Nation Medical Waste, Inc., 65 F.3d 1427, 1433 (8th
Cir. 1995) and Piper v. Kassel, 817 F. Supp. 802, 805 (E.D.
Mo. 1993). We need not decide whether these cases support Cramer's
argument. To the extent that they suggest that jurisdiction cannot
be founded on telephone calls alone, they are readily
distinguishable from the present case, since, as our discussion in
the text makes clear, Cramer's contacts went far beyond his
telephone call to Wade.
Footnote 16:
American Nat'l Bank v. International Seafoods, 735 P.2d 747,
752-53 n.10 (Alaska 1987).
Footnote 17:
Arkansas Rice Growers Coop. Ass'n v. Alchemy Indus., Inc., 797
F.2d 565, 574 (8th Cir. 1986).
Footnote 18:
465 U.S. 783 (1984).
Footnote 19:
Id. at 790.
Footnote 20:
465 U.S. 770 (1984).
Footnote 21:
Id. at 781 n.13.
Footnote 22:
Cramer cites Data Disc, Inc. v. Systems Technology Associates,
Inc., 557 F.2d 1280 (9th Cir. 1977), for the proposition that when
the issue of personal jurisdiction hinges on factual issues that
are genuinely disputed, the court must hear and resolve these
factual disputes before ultimately determining jurisdiction.
Footnote 23:
Alaska Telecom, Inc. v. Schafer, 888 P.2d 1296, 1301 (Alaska
1995) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476
(1985)).
Footnote 24:
Id. (citing Burger King, 471 U.S. at 477).
Footnote 25:
Id. (citing Burger King, 471 U.S. at 474).
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