Pohl, Inc. of America v. Webelhuth
Pohl, Inc. of America v. Webelhuth
Opinion of the Court
INTRODUCTION
T1 This case asks us to decide whether Utah's long-arm statute extends to defendants who allegedly engaged in a conspiracy to tortiously interfere with the plaintiff's contract and economic opportunities. We address whether Utah's long-arm statute provides for jurisdiction over individuals who never physically entered Utah but who conspired to cause tortious injury in Utah, and directed their actions toward Utah knowing that they would cause tortious injury there. We hold that it does.
BACKGROUND
12 When reviewing a district court's grant of a motion to dismiss, "we accept the factual allegations in the complaint as true and consider them, and all reasonable inferences to be drawn from them, in the light most favorable to the nonmoving party."
T3 This case arises from the construction of a performing arts center at the University of Missouri-St. Louis (the "Project"). The general contractor for the Project was KCI Construction Company ("KCI"), a Missouri company. KCI's project manager was Ron Webelhuth. KCI hired TAB. Company, Inc. ("TAB"), a Missouri corporation, as a subcontractor responsible for supplying panels to be installed on the exterior of the building. Because the architect's specifications for the building called for exterior panels manufactured by Pohl, Inc. of America ("Pohl") or their equivalent, TAB subcontracted Pohl, a Utah corporation, to manufacture and supply the panels. TAB also subcontracted a separate company, Industrial Sheet Metal Erectors, Inc. ("ISME"), to install the panels. ISME is a Missouri corporation. Dennis Miller is the president of ISME, and his son, Bret Miller, is the vice-president. Bret acted as project manager on the TAB job.
T4 In May 2005, Pohl filed suit in Utah against Webelhuth, Bret Miller, Dennis Miller, and ISME (collectively, the "Defendants"), alleging intentional interference with contract, intentional interference with prospective economic relations, and civil conspiracy. Pohl alleges that, beginning in February 2008, tensions began to arise between Pohl, ISME, and KCI regarding the production, delivery, and payment schedule for the panels fabricated by Pohl. According to Pohl, these tensions matured into a conspiracy between Bret Miller, ISME, and Webelhuth to interfere with Pohl's contract with TAB. The object of the conspiracy was to replace Pohl, as the panel supplier, with ISME, which could produce and supply a different type of panel more quickly. To this end, Poh! alleges that the defendants convinced the architect and the owner of the Project to change the project specifications from requiring Pohl panels to requiring panels that could be produced by ISME instead. Pohl also alleges that Webelhuth did not accept any other bids or research any other companies before replacing Pohl with ISME as the panel supplier.
T6 Pohl filed suit, and the defendants responded with a motion to dismiss for lack of personal jurisdiction, arguing that none of their actions fell within the specifically enumerated acts of Utah's long-arm statute and that there were insufficient minimum contacts between the defendants and the state of Utah. The bulk of their argument focused on the fact that all of the allegedly tortious acts took place in Missouri. The district court agreed and dismissed Pohl's complaint for lack of jurisdiction, concluding that the actions taken by the defendants upon which Pohl based its claims "were performed exclusively in the State of Missouri." Accordingly, the district court found "no nexus between Defendants' contacts with Utah and Plaintiff's claims."
I 7 Pohl appealed, and the court of appeals affirmed the district court's conclusion.
We tion pursuant to Utah Code section 78A-8-102(8)(a) (Supp. 2008).
STANDARD OF REVIEW
18 "On certiorari, we review for correctness the decision of the court of appeals, not the decision of the district court."
ANALYSIS
19 The authority of the state to hale a nonresident into a state court hinges on the ability to establish personal jurisdiction.
% 10 "[Specific personal jurisdiction gives a court power over a defendant only with respect to claims arising out of the particular activities of the defendant in the forum state" and only if the defendant has
1 11 Accordingly, we first analyze whether the court of appeals correctly interpreted Utah's long-arm statute, Utah Code section TSB-3-205. Second, we analyze whether the court of appeals correctly concluded that asserting jurisdiction over the defendants would violate due process.
I. THE COURT OF APPEALS ERRED BY INTERPRETING UTAH'S LONG-ARM STATUTE TOO NARROWLY
112 Utah's long-arm statute provides: "[Alny person ... whether or not a citizen or resident of this state, who, in person or through an agent, does any of the following enumerated acts is subject to the jurisdiction of the courts of this state as to any claim arising out of or related to [the enumerated acts]."
T13 The court of appeals concluded that Pohl could not satisfy the tortious injury requirement because "the causing of financial injury to a Utah business has been flatly rejected by the Utah courts as a basis for exercising personal jurisdiction."
A. The Tortious Injury Requirement
T 14 The court of appeals erroneously concluded that " 'the causing [of] financial injury to a Utah business has been flatly rejected by the Utah courts as a basis for exercising specific personal jurisdiction."
115 The plain language of the long-arm - statute - asserts - jurisdiction - over "claim[s] arising out of or related to" the "causing of any injury within this state whether tortious or by breach of warranty."
116 While it is true that financial injury alone cannot establish jurisdiction because such a rule "would lead to the unacceptable proposition that jurisdiction could be established anywhere a plaintiff might locate,"
17 For example, in Harnischfeger Engineers, Inc. v. Unific Conveyor, Inc., no tortious injury occurred in Utah.
18 Similarly, in Patriot Systems, Inc. v. C-Cubed Corp., the plaintiff, a Utah corporation that developed, manufactured, and sold computer software, alleged that the defendant, a computer software company in Virginia, had intentionally interfered with economic relations, misappropriated trade secrets, infringed the plaintiffs copyright, and engaged in unfair competition.
{19 We acknowledge the analytical difficulty of distinguishing between the satisfaction of minimum contacts in the due process analysis and the satisfaction of the long-arm statute. For this reason, "we often assume the application of the statute-and go straight to the due process issue."
120 Thus, to satisfy the long-arm statute requirement, a plaintiff must allege only that the defendants caused a tortious injury in Utah and that the plaintiff's claims arise out of the tortious injury. Pohl has satisfied this requirement by alleging that it was the target of a civil conspiracy to commit tortious interference with Pohl's contract and to interfere with Pohl's prospective economic relations. Pohl has alleged that the defendants directed their conspiracy toward Utah and knew that their actions would harm Pohl in Utah. Moreover, in contrast to the two cases discussed above, Pohl has also articulated injuries suffered in Utah that consist of more than a diminished bank account. For example, Pohl's primary place of business is Utah, where it spent money and resources to satisfy the panel order. In addition, after purported measurement errors delayed the production schedule, Pohl entered into a contract with its parent company in Germany to expedite delivery of the panels. Finally, Pohl will not recover any of these expenses as a result of the defendants' allegedly tor-tious activities. These injuries are the direct result of the defendants' alleged tortious interference with the contract. - Therefore, Pohl successfully pled facts showing that the defendants caused tortious injuries in Utah and accordingly Pohl satisfied the requirement of the long-arm statute.
B. The Transaction of Business Requirement
121 Pohl also argues that the long-arm statute applies to the defendants because they transacted business in Utah. The legislature broadly defined the "transaction of business within this state" as the "activities of a nonresident person, his agents, or representatives in this state, which affect persons or businesses within the state."
€22 The court of appeals rejected Pohl's argument, concluding that the plain language of the statute requires that "at least some activities must occur within Utah."
II. THE COURT OF APPEALS ERRED BY CONCLUDING THAT THERE WERE INSUFFICIENT MINIMUM CONTACTS BETWEEN THE DEFENDANTS AND UTAH TO SATISFY FEDERAL DUE PROCESS REQUIREMENTS
T28 Federal due process requires that in order to subject a defendant to specific personal jurisdiction, there must be "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice."
"In judging minimum contacts, a court properly focuses on 'the relationship among the defendant, the forum, and the litigation.' "
125 The premise of the conclusion reached by both the court of appeals and the trial court was that because all of the defendants' allegedly tortious actions took place in Missouri, no minimum contacts existed. This approach erroneously ignores the fact that a tort is incomplete without an injury, and thus the place of injury is an important component of the minimum contacts analysis.
127 In Harris Rutsky & Co. Insurance Services, Inc. v. Bell & Clements Ltd., the Ninth Cireuit rejected the same argument that the defendants make here.
128 The minimum contacts analysis in this case is complicated by the fact that there are several defendants, all alleged to be involved in a conspiracy to harm Pohl. Generally, "[elach defendant's contacts with the forum State must be assessed individually."
129 We see no need to adopt the conspiracy theory of jurisdiction in this case because the Calder "effects" test adequately addresses the issue. In Utah, civil conspiracy requires proof of five elements: "(1) a combination of two or more persons, (2) an object to be accomplished, (8) a meeting of the minds on the object or course of action,
€30 Although this principle is eagily articulated, its application is more complicated because asserting jurisdiction over members of a conspiracy could threaten to unravel the individualized analysis required for minimum contacts. For this reason, "a bare allegation of a conspiracy between the defendant and a person within the personal jurisdiction of the court is not enough" to establish jurisdiction."
131 Because this standard differs significantly from the standard applied by the district court or the court of appeals, we remand for further proceedings consistent with this opinion. On remand, to the extent that the plaintiff requests leave to amend, it would appear to be appropriate to allow an opportunity to amend in light of the applicable standard that we announce today.
132 The Utah long-arm statute does not distinguish between "financial injuries" and other tortious injuries. Because the legislature has directed that we interpret the long-arm statute to extend to the limits of the Due Process Clause, as long as a plaintiff alleges that the defendant caused an injury in Utah, any limitation on the type of injury that this court will recognize is more properly recognized as a due process limitation. We do not specifically adopt the "conspiracy theory of jurisdiction" in this case because we believe that jurisdiction can be established over the defendants under the Calder "effects" test by showing that the defendants were engaged in a conspiracy that was expressly aimed at Utah and that the conspiracy caused harm in Utah, as the defendants knew it would. Because the standard we articulate differs significantly from the standard applied by the courts below, we remand for further proceedings consistent with this opinion.
. MFS Series Trust III v. Grainger, 2004 UT 61, ¶ 6, 96 P.3d 927 (internal quotation marks omitted).
. Pohl, Inc. of Am. v. Webelhuth, 2007 UT App 225, ¶ 1, 164 P.3d 1272.
. Prior to 2008, the Utah long-arm statute was contained in Utah Code section 78-27-24. In 2008, the statute was amended and renumbered. The relevant amendments were minor and non-substantive. We therefore cite to the current version of the statute.
. Wasatch County v. Okelberry, 2008 UT 10, ¶ 8, 179 P.3d 768 (internal quotation marks omitted).
. D.A. v. State (In re W.A.), 2002 UT 127, ¶ 8, 63 P.3d 607.
. Arguello v. Indus. Woodworking Mach. Co., 838 P.2d 1120, 1121 (Utah 1992).
. Rocky Mountain Claim Staking v. Frandsen, 884 P.2d 1299, 1301 (Utah Ct.App. 1994) ("Personal jurisdiction means the power to subject a particular defendant to the decisions of the court." (internal quotation marks omitted)).
. Arguello v. Indus. Woodworking Mach. Co., 838 P.2d 1120, 1122 (Utah 1992) (emphasis omitted).
. Id. (emphasis omitted).
. Anderson v. Am. Soc'y of Plastic & Reconstructive Surgeons, 807 P.2d 825, 826 (Utah 1990); see also Arguello, 838 P.2d at 1122 (explaining that the ability to exercise specific jurisdiction over a nonresident defendant depends on two factors: "the breadth of the forum state's jurisdictional statute and the due process limitations on jurisdiction imposed by the Fourteenth Amendment to the United States Constitution.").
. Arguello, 838 P.2d at 1122.
. Utah Code Ann. § 78B-3-205 (Supp. 2008).
. Id. § 78B-3-205(1), (3).
. Pohl, Inc. of Am. v. Webelhuth, 2007 UT App 225, ¶ 11, 164 P.3d 1272 (alterations omitted) (internal quotation marks omitted).
. Id. ¶ 9.
. Id. ¶ 11 (alteration in original) (quoting Patriot Sys., Inc. v. C-Cubed Corp., 21 F.Supp.2d 1318, 1321 (D.Utah 1998)).
. Utah Code Ann. § 78B-3-205(3) (emphasis added).
. Id. § 78B-3-201(3).
. SII MegaDiamond, Inc. v. Am. Superabrasives Corp., 969 P.2d 430, 433 (Utah 1998).
. Burt Drilling, Inc. v. Portadrill, 608 P.2d 244, 250 (Utah 1980); see also STV Int'l Mktg. v. Cannondale Corp., 750 F.Supp. 1070, 1075 (D. Utah 1990) ("[Lloss of profits within a state in which a place of business is maintained simply is an insufficient basis on which to find that the injury occurred within that state as compared with the impact of actual business lost in another state.").
. 883 F.Supp. 608 (D.Utah 1995).
. Id. at 613.
. Id.
. Id.
. Id.
. 21 F.Supp.2d 1318, 1320 (D.Utah 1998).
. Id. at 1321.
. - Anderson v. Am. Soc'y of Plastic & Reconstructive Surgeons, 807 P.2d 825, 827 (Utah 1990).
. Utah Code Ann. § 78B-3-202(2).
. Pohl, 2007 UT App 225, ¶ 9, 164 P.3d 1272.
. See SII MegaDiamond, 969 P.2d at 435 (" 'So long as a commercial actor's efforts are "purposefully directed" towards residents of another state, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.'" (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985))).
. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted); see also MFS Series Trust III v. Grainger, 2004 UT 61, ¶ 10, 96 P.3d 927.
. MFS Series Trust III, 2004 UT 61, ¶ 10, 96 P.3d 927 (internal quotation marks omitted).
. Calder v. Jones, 465 U.S. 783, 790, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984).
. MFS Series Trust III, 2004 UT 61, ¶ 10, 96 P.3d 927 (internal quotation marks omitted); see also Burger King Corp. v. Rudzewics, 471 U.S. 462, 477-78, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); Fenn v. Mleads Enters. Inc., 2006 UT 8, ¶ 10, 137 P.3d 706 ('Thus, a Utah state court may assert specific personal jurisdiction over a foreign defendant only if (1) the defendant has minimum contacts with Utah and (2) the assertion of jurisdiction would not offend the traditional notions of fair play and substantial justice.").
. Calder, 465 U.S. at 788, 104 S.Ct. 1482 (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977)).
. Pavlovich v. Super. Ct. of Santa Clara, 29 Cal.4th 262, 127 Cal.Rptr.2d 329, 58 P.3d 2, 7 (2002) (internal quotation marks omitted).
. Fenn, 2006 UT 8, ¶ 13, 137 P.3d 706.
. See, eg., Calder, 465 U.S. at 788-89, 104 S.Ct. 1482.
. See Kailieha v. Hayes, 56 Haw. 306, 536 P.2d 568, 569 (1975) ("A tort is committed where the injury occurs, and the phrase 'tortious act' encompasses the injurious consequences of an act.").
. Haisten v. Grass Valley Med. Reimbursement Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986).
. 465 U.S. at 789-90, 104 S.Ct. 1482 (internal quotation marks omitted).
. - Id. at 785-86, 104 S.Ct. 1482.
. - Id. at 789, 104 S.Ct. 1482.
. Id. at 790, 104 S.Ct. 1482 (internal quotation marks omitted).
. 328 F.3d 1122 (9th Cir. 2003).
. Id. at 1131.
. Id.
. Id.
. Calder, 465 U.S. at 790.
. Textor v. Bd. of Regents, 711 F.2d 1387, 1392 (7th Cir. 1983) (alteration in original) (internal quotation marks omitted).
. Israel Pagan Estate v. Cannon, 746 P.2d 785, 790 (Utah Ct.App. 1987).
. Jedrziewski v. Smith, 2005 UT 85, ¶ 10, 128 P.3d 1146.
. Burger King, 471 U.S. at 475, 105 S.Ct. 2174 (citations and internal quotation marks omitted).
. Stauffacher v. Bennett, 969 F.2d 455, 460 (7th Cir. 1992).
. Cf. United States v. AVX Corp., 962 F.2d 108, 115 (1st Cir. 1992) (explaining that for certain issues, like standing, that are "fundamental to the ability to maintain a suit ... the Court has saddled the complainant with the burden of clearly alleging facts sufficient to ground standing ... [and] that, where standing is at issue, heightened specificity is obligatory at the pleading stage").
. Id.
. Id.
. 807 P.2d 825, 826-27 (Utah 1990).
. Id. at 827.
. Id.
. Id.
Dissenting Opinion
dissenting:
€385 I respectfully differ with my colleagues. I would affirm the court of appeals decision in all regards. While it is possible to draw the distinctions described in the opinion of Justice Parrish, I believe to do so invites other jurisdictions to do so as well, and would subject Utah citizens and companies to unnecessarily broad exposure to suit elsewhere. In this matter, the actions complained of, while clearly impacting the Utah plaintiff, just as clearly occurred in Missouri. None of the acts complained of occurred in Utah. I believe defining them as doing so violates the due process guarantees of the United States Constitution.
Reference
- Full Case Name
- POHL, INC. OF AMERICA, Plaintiff and Petitioner, v. Ron WEBELHUTH; Bret Miller; Dennis Miller; Industrial Sheet Metal Erectors, Inc.; And John Does I Through X, Defendants and Respondents
- Cited By
- 43 cases
- Status
- Published