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Polar Supply Company, Inc. v. Steelmaster Industries, Inc. (12/13/2005) sp-5970
Polar Supply Company, Inc. v. Steelmaster Industries, Inc. (12/13/2005) sp-5970
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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| POLAR SUPPLY COMPANY, INC.,
| ) |
|
| ) Supreme Court No. S-
11664 |
|
Appellant, | ) |
|
| ) Superior Court
No. |
|
v. | ) 3AN-03-07055
CI |
|
| ) |
|
STEELMASTER INDUSTRIES, | ) O P I N I O
N |
|
INC., | ) |
|
| ) [No. 5970 - December
23, 2005] |
|
Appellee. | ) |
|
| ) |
|
|
|
|
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Peter A. Michalski, Judge.
Appearances: Lea E. Filippi and William M.
Bankston, Bankston, Gronning, OHara, Sedor,
Mills, Givens & Heaphey, P.C., Anchorage, for
Appellant. James N. Leik, Perkins Coie LLP,
Anchorage, for Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
FABE, Justice.
I. INTRODUCTION
An Alaskan company, Polar Supply Company, Inc. (Polar),
purchased a telescopic trolley boom from Steelmaster Industries,
Inc. (Steelmaster), a Canadian corporation located in Ontario.
Polar had a number of problems with the boom and brought suit
against Steelmaster in the Alaska superior court. Steelmaster
argued that it was entitled to dismissal for lack of personal
jurisdiction, and the superior court agreed, dismissing Polars
suit. We reverse because we conclude that an exercise of
personal jurisdiction over Steelmaster is appropriate under
Alaskas long-arm statute and conforms to the requirements of due
process.
II. FACTS AND PROCEEDINGS
Polar Supply Company, Inc. is an Alaskan corporation.
Steelmaster Industries, Inc. is a Canadian corporation located in
Mississauga, Ontario. Presidents from both companies met for the
first time in Nevada at a National Concrete Masonry Association
convention. Steelmaster provided brochures and sales information
about its products during the convention. Following the
convention, Polar contacted Steelmaster to request a price
quotation for a telescopic trolley boom. Steelmaster sent a
sales proposal to Polar on January 20, 2000, quoting a price of
$44,950 for a 120-35TC telescopic boom. Polar accepted this
proposal in April 2000. Polar discussed the possibility of
becoming a dealer for Steelmaster in Alaska and requested an
eighteen percent dealer discount, but there is no evidence that
the parties entered into a dealership agreement or that the
proposed discount was accepted by Steelmaster. Steelmasters
contract of sale includes a one-year warranty covering product
defects.
Steelmaster manufactured the boom in Ontario. Polar
purchased and shipped the boom free on board (F.O.B.) from
Steelmasters manufacturing facility in Ontario to a company in
Washington where the boom was mounted onto a truck. Polar then
had the truck and boom shipped from Washington to Alaska, where
it was load tested. The boom failed to sustain the radius load
represented by Steelmaster and was deemed unsuitable for the
truck on which it was mounted.
On May 1, 2003, Polar filed suit against Steelmaster in
Alaska, seeking consequential damages for loss of production,
loss of use, loss of jobs, and loss of profits. Steelmaster
immediately moved for dismissal for lack of personal jurisdiction
and insufficient service of process. Polar then cured any defect
in service of process with service of a supplemental summons and
moved for permission to conduct jurisdictional discovery as to
whether Steelmaster had sufficient ongoing contacts with Alaska
to support an exercise of specific jurisdiction.
On July 30, 2004, the superior court ordered the matter
dismissed without prejudice but did not reference Polars request
for discovery.1 On August 25, 2004, a final judgment was entered
awarding $2,166.45 in attorneys fees and costs to Steelmaster.
Polar appeals.
III. DISCUSSION
A. Standard of Review
We review questions regarding personal jurisdiction de
novo because [j]urisdictional issues are questions of law subject
to this courts independent judgment.2 We adopt the rule of law
that is most persuasive in light of precedent, reason, and policy
when it comes to jurisdictional questions.3
B. The Exercise of Personal Jurisdiction over Steelmaster
Is Proper.
Alaskas long-arm statute, AS 09.05.015, is broad and
refers to several specific circumstances under which personal
jurisdiction may be exercised. These circumstances are not meant
to be exclusive4 but rather provide an authoritative basis for
simplifying most jurisdictional questions. By furnishing a list
of specific grounds providing jurisdiction, the statute avoids
converting every jurisdictional issue into a constitutional
question.5
For those circumstances that do not fit within the
terms of the statutory provisions, AS 09.05.015(c) states that
[t]he jurisdictional grounds stated in (a)(2) - (10) of this
section are cumulative and in addition to any grounds provided by
the common law. The insertion of this language into the statute
manifests the legislatures intent to have the long-arm statute co-
extensive with the Fourteenth Amendment.6 As we recently
explained in Cramer v. Wade, even if they had merit, [the
defendants] specific long-arm challenges would not be
determinative because our long-arm statutes catch-all subsection
(c) extends to any case falling outside the statutes other
subsections in which the exercise of jurisdiction is permissible
under the Fourteenth Amendment.7 Thus, we need not determine
whether this case fits perfectly within subsections (a)(4) or
(a)(5) if we conclude that due process permits the exercise of
jurisdiction over Steelmaster.
Arguably, jurisdiction over Steelmaster is specifically
authorized in this case by two subsections of AS 09.05.015(a).
Subsection (a)(4)8 provides jurisdiction in an action claiming
injury to person or property in [Alaska] arising out of an act or
omission out of [Alaska]. This provision is applicable if (a) at
the time of injury, solicitation or service activities were
carried on in Alaska by or on behalf of the defendant or (b)
products, materials, or things processed, serviced, or
manufactured by the defendant were used or consumed in Alaska in
the ordinary course of trade.9 Polar claims that economic losses
are sufficient to constitute injury under subsection (a)(4) of
the long-arm statute. The additional requirements of subsection
(a)(4) are satisfied by Steelmaster having sold a product to
Polar, an Alaskan company. Steelmasters contention that
subsection (a)(4)(B) is inapplicable where only a single product
is sold because the statutory language refers in the plural to
products, materials, or things manufactured by the out-of-state
defendant is not an argument in keeping with the reach of the
long-arm statute or with our previous cases.10 Nevertheless, it
does remain unclear whether monetary damages stemming from
breach of contract actions, rather than tort actions, can
constitute injury to property, as required by the statutory
provision and this case therefore fits uneasily into the
requirements of subsection (a)(4).
Subsection (a)(5)11 of the long-arm statute specifies an
array of contract actions that provide a basis for jurisdiction,
including an action that relates to goods . . . actually received
by the plaintiff in this state from the defendant without regard
to where delivery to the carrier occurred.12 Subsection (a)(5)(C)
further provides for jurisdiction in an action that arises out of
a promise, made anywhere to the plaintiff . . . by the defendant
to deliver or receive in this state or to ship from this state
goods, documents of title or other things of value.13 At oral
argument, Steelmaster disputed subsection (a)(5)s applicability,
relying on the fact that Steelmaster itself never shipped the
boom to Alaska but instead arranged for Polar to ship it from
Steelmasters manufacturing facility to Washington, where it was
then mounted onto the truck and subsequently shipped to Alaska.
Solely because of the nature of the shipping arrangements,
then, the case does not fall easily within the requirements of
subsection (a)(5) of the long-arm statute.
Since the unique nature of this contract makes this
case difficult to categorize within the enumerated provisions of
the statute, we find it more appropriate to examine jurisdiction
using the standards set by AS 09.05.015(c), which authorizes
Alaskas courts to assert jurisdiction to the maximum extent
permitted by due process.14 We traditionally analyze personal
jurisdiction under the long-arm statute by examining the
requirements of due process. As the United States Supreme Court
explained in International Shoe Co. v. Washington, due process
requires that a defendant have minimum contacts with the forum
state such that maintaining a suit in the forum state does not
offend traditional notions of fair play and substantial justice. 15
When a controversy is related to or arises out of a
defendants contacts with the forum, the exercise of jurisdiction
is said to be specific and is justified on the basis of the
relationship among the defendant, the forum, and the litigation.16
An out-of-state defendant who has not consented to suit in the
forum state is said to have fair warning that his conduct will
render him liable to suit if he has purposefully directed his
activities at residents of the forum17 and the litigation arises
out of or relates to those activities.18 The United States
Supreme Court has further emphasized that parties who reach out
beyond one state and create continuing relationships and
obligations with citizens of another state are subject to
regulation and sanctions in the other State for the consequences
of their activities.19 And we have recognized that [t]he contract
along with such other factors as prior negotiations and future
consequences . . . and the parties actual course of dealing . . .
must be evaluated in determining whether the defendant
purposefully established minimum contacts with the forum. 20 We
have found it particularly significant when an out-of-state
defendant solicited, initiated, or directly contacted the Alaskan
resident.21
In this instance, Steelmaster traveled to Nevada to a
trade show of the National Concrete Masonry Association in order
to market its equipment. Steelmaster sought purchasers for its
products at this Nevada convention, where prospective buyers from
throughout the United States were presumably present.
Steelmaster relies on the fact that Polar initiated contact with
Steelmaster in Ontario, but it is undisputed that Polar learned
about Steelmasters product and availability at the trade show in
the United States. Although Steelmaster does not advertise
specifically in Alaska, it does buy advertisements in national
trade journals published by the National Concrete Masonry
Association. Steelmaster also has five dealers in the eastern
and central regions of the United States. Moreover, the record
indicates that Steelmaster held itself out on its website as a
company that offer[s] complete, factory backed local distribution
to service the masonry, precast and building industries
throughout North America. Because Steelmaster holds itself out
to buyers throughout the United States, it therefore should
reasonably have anticipated that its products would be purchased
by Alaskan companies.
Moreover, at the time Steelmaster entered into a
contract for the sale of the trolley boom to Polar, Steelmaster
was aware that Polar was an Alaskan corporation that planned to
use the trolley boom in Alaska. Polar maintains that apart from
the contract itself, Steelmaster had other contacts with Alaska,
including negotiations about the contract, discussions about the
possibility of Polar becoming a dealer for Steelmasters
operations in Alaska, and provision of an express warranty in the
contract that created an ongoing obligation to service and repair
the boom for a year after sale. Steelmaster guaranteed Polar
that any [d]efects developing in any part of a machine . . . will
be replaced or repaired free of charge at our option within one
year. This warranty clause is an example of a party purposefully
creating continuing relationships and obligations with citizens
of another state and thereby subjecting that party to regulations
and sanctions in that other state as a consequence.22
We have previously explained that emphasis should be
placed on the quality rather than the quantity of the contacts.23
As the Ninth Circuit reasoned, [t]he purposeful availment
requirement is met if the defendant performed some type of
affirmative conduct which allows or promotes the transaction of
business within the forum state. 24 We conclude that Steelmaster
made the affirmative choice to contract with an Alaskan
corporation that planned to use its product in Alaska and hence
conclude that Steelmaster purposefully availed itself of the
privilege of conducting business activities within Alaska.25
The final inquiry required by due process is whether
the assertion of personal jurisdiction comports with fair play
and substantial justice.26 Once it has been determined that a
defendant purposefully established minimum contacts with Alaska,
he must present a compelling case that the presence of some other
considerations would render jurisdiction unreasonable in order to
defeat personal jurisdiction.27 In making this determination, we
evaluate several factors, including: the burden on the defendant,
the forum states interest in adjudicating the dispute, the
plaintiffs interest in obtaining convenient and effective relief,
the interstate judicial systems interest in obtaining the most
efficient resolution of controversies, and the shared interest of
the states in furthering fundamental social policies.28
Steelmaster argues that as a small Canadian corporation
with only eighteen employees, it would face a tremendous burden
defending litigation in Alaska because its employees would be
forced to travel thousands of miles from their residence in
Ontario, at considerable expense, inconvenience, and loss of
time. Polar does not dispute this, but rather argues that
because Steelmaster does not limit its business activities or
advertising to Canada, it should be required to litigate where
its products fail.
First, we agree with the Ninth Circuit that the
existence of an ongoing relationship with the United States is
relevant when considering sovereignty concerns,29 and find it
significant that Steelmaster has dealers in Illinois, New York,
New Jersey, Maryland, and Florida. We are unconvinced that
Steelmaster would be more inconvenienced by a suit in Alaska than
by a suit brought in one of these other states. Similarly, it
seems reasonable for Steelmaster to anticipate a possible lawsuit
in Alaska from the sale of a complicated piece of machinery
valued at almost $45,000, which it has guaranteed against
defects.
Second, Steelmaster argues that Ontario would be a
suitable alternative forum and contends that because the boom was
assembled in Ontario any alleged defect will require testimony
from Steelmaster employees involved in the assembly. But as we
have previously explained, [i]nconvenience to at least some
parties will probably be associated with litigation in either
this jurisdiction or the [foreign] forum which [the defendant]
prefers.30 While it is true that the boom was manufactured in
Ontario, it was tested by the American Bureau of Crane
Inspection, Inc. in Alaska, where it failed to sustain the radius
load represented by Steelmaster. Thus, both parties stand to be
inconvenienced because testimony will be required from witnesses
in Ontario and Alaska, and Steelmasters inconvenience in this
instance is not sufficient to constitute a denial of due process.
We conclude that Steelmaster has sufficient minimum contacts with
Alaska and that an exercise of personal jurisdiction in this case
comports with fair play and substantial justice.
IV. CONCLUSION
For the foregoing reasons, we REVERSE the superior
courts order dismissing the case for lack of personal
jurisdiction and REMAND for proceedings consistent with this
opinion.
_______________________________
1 Our resolution of this case does not require us to
reach Polars claim that the superior court abused its discretion
when it refused to permit additional discovery as to whether
Steelmaster was subject to general jurisdiction.
2 See S.B. v. State, Dept of Health & Soc. Servs., Div.
of Family & Youth Servs., 61 P.3d 6, 10 (Alaska 2002) (quoting
McCaffery v. Green, 931 P.2d 407, 408 n.3 (Alaska 1997)).
3 Id. (quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6
(Alaska 1979)).
4 See McCaffery v. Green, 931 P.2d 407, 408 (Alaska 1997)
(citing Alaska Telecom, Inc. v. Schafer, 888 P.2d 1296, 1299
(Alaska 1995)).
5 Alaska Telecom, 888 P.2d at 1299.
6 Id.
7 985 P.2d 467, 471 (Alaska 1999) (citing Glover v.
Western Air Lines, Inc., 745 P.2d 1365, 1367 (Alaska 1987) and
Alaska Telecom, 888 P.2d at 1299).
8 AS 09.05.015(a)(4) provides:
(a) A court of this state having
jurisdiction over the subject matter has
jurisdiction over a person served in an
action according to the rules of civil
procedure
. . . .
(4) in an
actio
n
claim
ing
injur
y to
perso
n or
prope
rty
in
this
state
arisi
ng
out
of an
act
or
omiss
ion
out
of
this
state
by
the
defen
dant,
provi
ded,
in
addit
ion,
that
at
the
time
of
the
injur
y
eithe
r
(A) solicitation or service activities
were carried on in this state by or on behalf
of the defendant; or
(B) products, materials, or things
processed, serviced, or manufactured by the
defendant were used or consumed in this state
in the ordinary course of trade[.]
9 AS 09.05.015(a)(4)(A) & (B).
10 See, e.g., Jonz v. Garrett/Airesearch Corp., 490 P.2d
1197, 1199 (Alaska 1971) (citing International Shoe Co. v.
Washington, 326 U.S. 310, 319 (1945)).
11 AS 09.05.015(a)(5) provides:
(a) A court of this state having
jurisdiction over the subject matter has
jurisdiction over a person served in an
action according to the rules of civil
procedure
. . . .
(5) in an action that
(A) arises out of a promise, made
anywhere to the plaintiff or to some third
party for the plaintiffs benefit, by the
defendant to perform services in this state
or to pay for services to be performed in
this state by the plaintiff;
(B) arises out of services actually
performed for the plaintiff by the defendant
in this state, or services actually performed
for the defendant by the plaintiff in this
state if the performance in this state was
authorized or ratified by the defendant;
(C) arises out of a promise, made
anywhere to the plaintiff or to some third
party for the plaintiffs benefit, by the
defendant to deliver or receive in this state
or to ship from this state goods, documents
of title, or things of value;
(D) relates to goods, documents of
title, or other things of value shipped from
this state by the plaintiff to the defendant
on the order or direction of the defendant;
or
(E) relates to goods, documents of
title, or other things of value actually
received by the plaintiff in this state from
the defendant without regard to where
delivery to the carrier occurred.
12 AS 09.05.015(a)(5)(E).
13 AS 09.05.015(a)(5)(C).
14 Am. Natl Bank & Trust Co. v. Intl Seafoods of Alaska,
Inc., 735 P.2d 747, 749 (Alaska 1987) (citing Jonz, 490 P.2d at
1199).
15 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S.
457, 463 (1940)).
16 Glover, 745 P.2d at 1367 (citing Helicopteros
Nacionales de Colombia v. Hall, 466 U.S. 408, 414 & n.8 (1985)).
17 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472
(1985) (citing Keeton v. Hustler Magazine, Inc., 465 U.S. 770,
774 (1984)).
18 Id. at 472 (citing Helicopteros, 466 U.S. at 414).
19 Id. at 473 (citing McGee v. International Life Ins.
Co., 355 U.S. 220, 222-23 (1957) and Travelers Health Assn v.
Virginia, 339 U.S. 643, 647 (1950)).
20 Alaska Telecom, 888 P.2d at 1300 (quoting Burger King,
471 U.S. at 479).
21 See, e.g., Cramer, 985 P.2d at 471; Alaska Telecom, 888
P.2d at 1301; Am. Natl Bank, 735 P.2d at 752-53 n.10.
22 Am. Natl Bank, 735 P.2d at 752 (quoting Burger King,
471 U.S. at 472).
23 Jonz, 490 P.2d at 1199 (citing International Shoe, 326
U.S. at 319).
24 Harris Rutsky & Co. Ins. Svcs., Inc. v. Bell & Clements
Ltd., 328 F.3d 1122, 1130 (9th Cir. 2003) (quoting Sher v.
Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990)).
25 Am. Natl Bank, 735 P.2d at 752.
26 Id. at 753.
27 Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1114 (9th
Cir. 2002) (quoting Burger King, 471 U.S. at 477).
28 Am. Natl Bank, 735 P.2d at 753.
29 See Sinatra v. Natl Enquirer, 854 F.2d 1191, 1199 (9th
Cir. 1988) (recognizing that continuing contacts between the
[Swiss] Clinics United States-based agent and California
translate into less of a litigation burden than if the Clinic
maintained no physical presence or agent with the United States).
30 Volkswagenwerk, A.G. v. Klippan, GmbH, 611 P.2d 498,
502 (Alaska 1980) (rejecting two German corporations claims that
subjecting them to suit in Alaska would be unreasonable and
explaining that Alaskas jurisdictional power must be upheld
despite claims of inconvenience and unreasonableness by [the
nonresident defendant]).
