Opinion
No. C5-96-2017.
Filed April 1, 1997.
Appeal from the District Court, Hennepin County, File No. 9414680.
Mark W. Lee, Maslon Edelman Borman Brand, P.L.L.P., (for Respondents)
James L. Haigh, Andrea E. Reisbord, Cousineau, McGuire Anderson, Chartered, (for Appellant)
Considered and decided by Toussaint, Chief Judge, Lansing, Judge, and Huspeni, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
The district court, relying on a theory of joint venture, concluded that KT's Kitchens, Inc. is subject to the personal jurisdiction of Minnesota courts. The evidence does not meet the elements necessary to establish a joint venture, and KT's Kitchens lacks the requisite minimum contacts with Minnesota to support jurisdiction. We reverse.
FACTS
Nicholas Hansen and Hansen International Sales Corporation, Inc., (collectively "Hansen") purchased 10 vending machines and more than 8,000 pizzas in 1993 to develop a pizza vending machine business. In March 1994 Hansen sued five entities connected with the transaction, KT's International, Inc. (KTI), Vendtron, KT's Kitchens, Inc. (KTK), Indoor Amusement Games, Inc., and Entertainment Enterprises, Inc. Hansen alleges fraud, breach of warranty, statutory consumer fraud, statutory false advertising, and product liability for representations made about the vending machines and for their defective performance.
In its complaint Hansen alleges that Vendtron and KTK were joint venturers in an enterprise to market and sell the pizza machines and pizzas through KTI. Vendtron is a Florida corporation that develops and manufactures vending machines and packaging used for vending machine items. KTK produces and markets frozen food products, is incorporated in Nevada, and its primary place of business is in California. Kathleen Taggares is the owner and sole shareholder of KTK. At the time relevant to this lawsuit, Charlene Gondek was the president of, and legal shareholder in, Vendtron.
Gondek and Taggares, in their individual capacities, formed KTI, a Delaware corporation. KTI was formed (1) to market or lease Vendtron's vending machines, (2) to license intellectual property owned by Vendtron, (3) to manufacture or market Vendtron's vending machine packaging, and (4) to supply customers of the vending machine with food products from KTK.
KTK moved to be dismissed as a party, claiming Minnesota courts did not have jurisdiction over it. The court denied the motion, reasoning that there was enough evidence tending to establish a joint venture such that the other business entity's contacts with Minnesota would be imputed to KTK.
DECISION
The determination of whether personal jurisdiction exists is a question of law that we review de novo. V.H. v. Estate of Birnbaum , 543 N.W.2d 649, 653 (Minn. 1996). A plaintiff need only make a prima facie showing of jurisdiction at the pretrial stage. Id. Whether a joint venture exists is also a question of law. Weber by Sanft v. Goetzke, 371 N.W.2d 611, 616 (Minn.App. 1985), review denied (Minn. Sept. 26, 1985).
I
A joint venture is created when two or more persons or entities combine their skill, time, property, and money in a business enterprise and agree to share the profits (and usually the losses) of the business. Rehnberg v. Minnesota Homes, Inc. , 236 Minn. 230, 234-35, 52 N.W.2d 454, 456-57 (1952). The effect of a joint venture is to make individual defendants jointly liable due to their mutual undertaking. Walton v. Fujita Tourist Enters. Co. , 380 N.W.2d 198, 202 (Minn.App. 1986), review denied (Minn. Mar. 21, 1986). If a joint venture is found, one joint venturer's contacts with a forum state may be imputed to other members of the venture for purposes of conferring jurisdiction. Curry v. McIntosh , 389 N.W.2d 224, 228 (Minn.App. 1986), review denied (Minn. Aug. 20, 1986). Each case depends on its particular facts, but a joint venture exists only if four elements are all present: (1) contribution, (2) joint proprietorship and mutual control, (3) sharing of profits, and (4) an express or implied contract. Rehnberg , 236 Minn. at 235-36, 52 N.W.2d at 457.
With respect to the element of contribution, an agreement between KTK, Vendtron, Taggares, and Gondek (the 1993 agreement) indicates that KTK agreed to purchase equipment and tooling to supply pizzas to KTI. The 1993 agreement also states that "KTI shall be entitled to joint use of such equipment with" KTK. We note that the equipment was used to make the pizzas and Hansen's claims are based on the vending machines, but for purposes of determining jurisdiction at this stage of the proceeding, the pizza-making equipment could be considered a contribution to the alleged joint venture.
In analyzing the element of mutual control or joint proprietary interest, it is unnecessary that mutual control extend to every aspect of the venture, and the division of responsibilities does not negate the existence of a joint venture. Walton , 380 N.W.2d at 202. There is no evidence that KTK exercised any control over the design, manufacture, and distribution of the vending machines, but we accept for purposes of our analysis that the alleged joint venture was not just the sale of vending machines, but the sale of pizzas through vending machines. Viewed from that perspective, KTK could arguably have delegated the control of the manufacture and distribution of the vending machines to the other parties who had more expertise with the machines.
But there is no evidence of an express or implied agreement between any of the entities to share profits, a key element of a joint venture. Rehnberg , 236 Minn. at 235-36, 52 N.W.2d at 457. The 1993 agreement provides that the profits and losses of KTI would be shared only by Taggares and Gondek. Taggares and Gondek elected to do business by forming a new corporation, KTI, which is different from a joint venture. See In re TMJ Implants Prods. Liab. Litig. , 880 F. Supp. 1311, 1316 (D.Minn. 1995) (refusing to find joint venture when entities did not have agreement to share profits and losses and "specifically elected to do business together via the corporate form, a method that is viewed as distinct from a joint venture"). Under the agreement the only money KTK was to receive from KTI was to reimburse KTK for its initial purchase of equipment, not as any share of profits.
The last necessary element of a joint venture is "a contract, express or implied, showing that [the parties] did in fact intend to create a joint adventure." Virnig v. Smith , 252 Minn. 363, 368, 90 N.W.2d 241, 244 (1958). The evidence fails to show any contract demonstrating an intent to create a joint venture. Hanson contends, without evidentiary support, that there were implied agreements among the parties to cooperate to produce and sell the vending machines and pizzas. Even if we accepted Hansen's contention on this element, the other elements are still unsatisfied.
The four elements necessary to establish a joint venture are not present. The existence of a contract is unproved, the evidence of mutual control is weak, the evidence of contribution is marginal, and there is no evidence of sharing profits. The evidence is inadequate to demonstrate a joint venture.
Hansen points to other evidence that he claims demonstrates joint activities. This evidence includes statements by Entertainment Enterprises that Vendtron and KTK were joint venturers, a promotional video that stated KTK and Vendtron had joined together to develop and market the vending machines and pizzas, a letter from Taggares with a facsimile cover sheet bearing KTK's name, KTK and KTI using the same address and telephone number in California, and the front of the vending machines that featured the initials "KT's." Although these activities show overlapping involvement of the entities, they do not create a joint venture. See TMJ Implants , 880 F. Supp. at 1316 (holding that "Dow Corning" is not product of joint venture even though Dow Chemical and Corning Company may "have fostered the public perception that Dow Corning is a joint venture of those two companies").
II
Hansen contends that even if the parties were not involved in a joint venture, Minnesota courts may still assert jurisdiction over KTK because KTK had sufficient minimum contacts with Minnesota. KTK argues that this issue is not properly before this court.
A party must file a notice of review if it disputes the district court's ruling on a particular issue, even if the judgment below is ultimately in its favor. Arndt v. American Family Ins. Co. , 394 N.W.2d 791, 793 (Minn. 1986). If a party fails to file a notice of review pursuant to Minn.R.Civ.App.P. 106, the issue is not preserved for appeal, and a reviewing court will not address it. City of Ramsey v. Holmberg , 548 N.W.2d 302, 305 (Minn.App. 1996), review denied (Minn. Aug. 6, 1996), and cert. denied , 117 S.Ct. 766 (1997).
In its memorandum the district court stated that alone, KTK's conduct "has none of the continuous and pervasive contacts that would subject it to the general jurisdiction of this Court." Hansen did not file a notice of review on this issue. Hansen argues that the district court did not address its arguments on specific personal jurisdiction, and it was therefore unnecessary to file a notice of review. We are convinced that the district court was not using "general jurisdiction" as a term of art to distinguish it from specific jurisdiction. Instead, we believe the district court rejected Hansen's minimum contacts argument, and that is why the court relied on the joint venture theory as providing a basis for jurisdiction. Hansen was required to file a notice of review to preserve this issue.
Even if Hansen had filed a notice of review, his argument fails. Because Minnesota's long-arm statute extends jurisdiction to the fullest extent allowed by the due process clause, in practice we ask only whether jurisdiction over a party is consistent with the due process clause. Soo Line R.R. Co. v. Hawken Siddeley Canada, Inc. , 950 F.2d 526, 528 (8th Cir. 1991). To satisfy due process, a plaintiff must demonstrate that "the defendant purposefully established `minimum contacts' in the forum State." Burger King Corp. v. Rudzewicz , 471 U.S. 462, 474, 105 S.Ct. 2174, 2183 (1985) (quoting International Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 158 (1945)). The quality of these minimum contacts must be such that the assertion of jurisdiction comports with "`traditional notions of fair play and substantial justice.'" International Shoe , 326 U.S. at 316, 66 S.Ct. at 158 (quoting Milliken v. Meyer , 311 U.S. 457, 463, 61 S.Ct. 339, 342-43 (1940)). A defendant's activities must be such that the defendant purposefully avails itself of the privilege of doing business within the forum state. Hansen v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 1240 (1958).
The evidence does not show that KTK was involved with the sale of the pizza machines. Taggares stated in an affidavit that KTK did not assist in "the manufacturing, designing, marketing, sale or dissemination of the pizza vending machine[s]." KTK's only activity related to Minnesota was the two shipments of pizzas to Hansen through a Florida-based distributor in 1993. The distributor invoiced Hansen for the pizzas; KTK had no direct dealings with Hansen relating to these sales. These isolated transactions do not establish that KTK purposefully availed itself of the privilege of doing business in Minnesota. We conclude that Hansen has not shown sufficient minimum contacts to meet due process requirements. See Estate of Birnbaum , 543 N.W.2d at 653 (noting that when jurisdiction is challenged, plaintiff bears the burden of proving minimum contacts).