Opinion
No. 203776
Submitted October 6, 1998, at Detroit.
Decided April 16, 1999, at 9:00 A.M.
Marc A. Goldman Associates, P.C. (by Marc A. Goldman), for the plaintiff, Farmington Hills.
Weisman, Trogan, Young Schloss, P.C. (by Martin C. Weisman), for the defendant, Bingham Farms.
Before: KELLY, P.J., and HOLBROOK, JR., and MURPHY, JJ.
Plaintiff appeals as of right from two trial court orders granting summary disposition to defendant. We reverse and remand.
I. Background Facts and Procedural History
Defendant is a Canadian corporation, with offices located in Toronto, Ontario, and New York City, New York. Plaintiff is the widow of Gilbert Aaronson (hereafter Aaronson). In April 1991, Aaronson, who was a Michigan resident, contacted defendant's Arizona agent and requested that defendant's sales literature be mailed to him. Shortly thereafter, Aaronson initiated direct contact with defendant by telephoning defendant's Toronto office. Subsequent communications between Aaronson and defendant were initiated by both parties. Additional sales literature was also mailed to Aaronson from defendant's Toronto office.
From June 1991 to October 1992, Aaronson purchased a total of eighteen gemstones from defendant. The total cost of the gemstones, minus shipping and handling, was stipulated by plaintiff and defendant as being in excess of $125,000. The gemstones were shipped to Aaronson from Toronto in ten separate shipments. Each shipment was paid for separately by Aaronson. During this time, defendant did not maintain an office in Michigan, and no employee, salesperson, agent, officer, or shareholder of defendant visited Michigan for the purpose of conducting business with Aaronson.
Plaintiff filed this action seeking rescission of all the gemstone sales. In her complaint, plaintiff alleged that defendant violated both the Michigan Uniform Securities Act (MUSA), MCL 451.501 et seq.; MSA 19.776(101) et seq. (count I), and the Michigan Consumer Protection Act, MCL 445.901 et seq.; MSA 19.418(1) et seq. (count III). Plaintiff also alleged that defendant had committed a common-law fraud (count II). In lieu of answering the complaint, defendant filed a motion for summary disposition, claiming (1) that the trial court's exercise of limited personal jurisdiction violated due process and (2) that the MUSA is inapplicable, given that because the gemstones were not commodities, the parties never entered into a commodities contract. The trial court agreed, and in two separate orders granted defendant summary disposition with regard to all counts.
II. Limited Personal Jurisdiction
This Court employs a two-step analysis when examining whether the state of Michigan may exercise limited personal jurisdiction over a defendant. First, we ascertain if jurisdiction is authorized by MCL 600.715; MSA 27A.715 (Michigan's long-arm statute). Second, we determine if the exercise of jurisdiction is consistent with the requirements of the Due Process Clause of the Fourteenth Amendment. Starbrite Distributing, Inc v. Excelda Mfg Co, 454 Mich. 302, 304; 562 N.W.2d 640 (1997); Jeffrey v. Rapid American Corp, 448 Mich. 178, 185; 529 N.W.2d 644 (1995).
A. The long-arm statute
Michigan's long-arm statute states:
The existence of any of the following relationships between a corporation or its agent and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise limited personal jurisdiction over such corporation and to enable such courts to render personal judgments against such corporation arising out of the act or acts which create any of the following relationships:
(1) The transaction of any business within the state.
(2) The doing or causing any act to be done, or consequences to occur, in the state resulting in an action for tort.
(3) The ownership, use, or possession of any real or tangible personal property situated within the state.
(4) Contracting to insure any person, property, or risk located within this state at the time of contracting.
(5) Entering into a contract for services to be performed or for materials to be furnished in the state by the defendant. [MCL 600.715; MSA 27A.715.]
Plaintiff alleges that the acts engaged in by defendant are sufficient for the state to invoke its authority to exercise limited personal jurisdiction under MCL 600.715(1), (2); MSA 27A.715(1), (2). We agree. In Sifers v. Horen, 385 Mich. 195; 188 N.W.2d 623 (1971), the Michigan Supreme Court observed that as used in subsection 1 of the long-arm statute, the term "`any' means just what it says. It includes `each' and `every' [business transaction]." Id. at 199, n 2. "Thus," this Court has noted, "the Supreme Court interpreted [the long-arm statute] to its full potential." Kiefer v. May, 46 Mich. App. 566, 571; 208 N.W.2d 539 (1973). We conclude that the communications that took place between Aaronson and defendant, and the shipment of the gemstones into Michigan satisfy the requirements of the long-arm statute. Id. at 570-571; Evans Tempcon, Inc v. Index Industries, Inc, 778 F. Supp. 371, 375 (WD Mich., 1990).
That the breadth of the reach afforded by the long-arm statute is extended "to the farthest limits permitted by due process," Sifers, supra at 199, was further emphasized in Starbrite. In Starbrite, the Court concluded that as it is employed in subsection 5 of the statute, the term furnished "is a broader concept than the simple concept of delivery." Starbrite, supra at 307. The Starbrite Court concluded that "the long-arm statute was satisfied because the defendant entered into a contract for materials to be furnished in Michigan." Id. at 307-308. The fact that the goods were shipped F.O.B. to a common carrier in St. Louis, Missouri, was not dispositive. Id. Accordingly, although not argued by plaintiff, we believe that the shipping of the gemstones to Aaronson in Michigan means the state also acquired limited personal jurisdiction over defendant under subsection 5. Id.
B. Due process
We next turn to the question whether the exercise of limited personal jurisdiction over defendant is consistent with the requirements of due process. In the seminal case of Int'l Shoe Co v. Washington, 326 U.S. 310; 66 S.Ct. 154; 90 L.Ed. 95 (1945), the United States Supreme Court stated that "due process requires only that in order to subject a defendant to a judgment in personam, if he not be present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Id. at 316, quoting Milliken v. Meyer, 311 U.S. 457, 463; 61 S.Ct. 339; 85 L.Ed. 278 (1940). Accord Asahi Metal Industry Co, Ltd v. Superior Court of California, Solana Co, 480 U.S. 102, 113; 107 S.Ct. 1026; 94 L.Ed.2d 92 (1987); Starbrite, supra at 308.
See Burnham v. Superior Court of California, Marin Co, 495 U.S. 604; 110 S.Ct. 2105; 109 L.Ed.2d 631 (1990).
When determining whether such minimum contacts exist, we apply a three-pronged test:
First, the defendant must have purposefully availed itself of the privilege of conducting activities in Michigan, thus invoking the benefits and protections of this state's laws. Second, the cause of action must arise from the defendant's activities in the state. Third, the defendant's activities must be so substantially connected with Michigan to make the exercise of jurisdiction over the defendant reasonable. [ Mozdy v. Lopez, 197 Mich. App. 356, 359; 494 N.W.2d 866 (1992).]
Accord Starbrite, supra at 309; Jeffrey, supra at 186.
1. Purposeful availment
"`[P]urposeful availment' is something akin either to a deliberate undertaking to do or cause an act or thing to be done in Michigan or conduct which can be properly regarded as a prime generating cause of the effects resulting in Michigan. . . ." Khalaf v. Bankers Shippers Ins Co, 404 Mich. 134, 153; 273 N.W.2d 811 (1978). Accord Hanson v. Denckla, 357 U.S. 235, 253; 78 S.Ct. 1228; 2 L.Ed.2d 1283 (1958); Jeffrey, supra at 187-188. "When a corporation `purposefully avails itself of the privilege of conducting activities within the forum State,' Hanson v. Denckla, 357 U.S. at 253, it has clear notice that it is subject to suit there. . . ." World-Wide Volkswagen Corp v. Woodson, 444 U.S. 286, 297; 100 S.Ct. 559; 62 L.Ed.2d 490 (1980). In other words, the "`purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of `random,' `fortuitous,' or `attenuated' contacts, or of the `unilateral activity of another party or a third person." Burger King Corp v. Rudzewicz, 471 U.S. 462, 475; 105 S.Ct. 2174; 85 L.Ed.2d 528 (1985) (citations omitted).
We believe that defendant's contacts with the state were not "`random,' `fortuitous,' or `attenuated.'" Id. While Aaronson may have initiated the first contact with defendant, defendant's active participation in the ensuing business relationship dispels the notion that defendant was somehow the passive recipient of "unilateral activity" on the part of Aaronson. Starbrite, supra at 310-311. Over a sixteen-month period, defendant arranged for the shipment to Aaronson of gemstones priced in excess of $125,000. If defendant wanted to avoid the prospect of being brought into court in Michigan, it could have declined to send the gemstones into the state. Id. at 311, n 10. Additionally, throughout this period Aaronson and defendant communicated by mail and telephone. Defendant concedes that this continuing pattern of communication was initiated by both parties. Further, some of the material mailed to Aaronson is acknowledged to have been sales literature. See Burger King, supra at 476 (observing that "it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications"); see also Quill Corp v. North Dakota, 504 U.S. 298, 308; 112 S.Ct. 1904; 119 L.Ed.2d 91 (1992).
We conclude, therefore, that defendant availed itself of the opportunity to do business in Michigan. As a result, defendant should have anticipated the possibility that it could be subject to suit in the state. See id. at 313 (observing that in due process jurisprudence, minimum contacts serve as a "proxy for notice").
2. Did the cause of action arise from defendant's contacts with the state?
As previously mentioned, plaintiff's complaint alleged: (1) violation of the MUSA, (2) common-law fraud, and (3) violation of the Michigan Consumer Protection Act. Because each count of plaintiff's cause of action was predicated on the sale of the gemstones, we find that plaintiff's cause of action did arise from defendant's contacts with the state. Starbrite, supra at 312.
3. Is the exercise of limited jurisdiction reasonable?
Once it has been decided 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." Thus, courts in "appropriate case[s]" may evaluate "the burden on the defendant," "the forum State's interest in adjudicating the dispute," "the plaintiff's interest in obtaining convenient and effective relief," "the interstate judicial system's interest in obtaining the most efficient resolution of controversies," and the "shared interest of the several States in furthering fundamental substantive social policies." [ Burger King, supra at 476-477 (citation omitted).]
Accord Starbrite, supra at 313.
After considering all the relevant factors, we conclude that they do not indicate that the state's exercise of limited personal jurisdiction over defendant is unreasonable. First, we believe it is self-evident that Michigan has a "`manifest interest in providing effective means of redress'" for one of its citizens who alleges that her deceased husband had been defrauded by an out-of-state company. World-Wide, supra at 300 (quoting McGee v. Int'l Life Ins Co, 355 U.S. 220, 223; 78 S.Ct. 199; 2 L.Ed.2d 223); Starbrite, supra at 313-314.
Second, we conclude that on balance, Michigan is the most convenient forum for an efficient resolution of this matter. Michigan is the location of the purchaser of the gemstones and the plaintiff. It is also the place where the gemstones were shipped. We believe that plaintiff would be severely disadvantaged if she were forced to seek legal redress outside this forum. McGee, supra at 223. While it may be somewhat inconvenient for defendant to litigate in this forum, we are not convinced (and defendant has not established) that this potential inconvenience renders jurisdiction in Michigan unconstitutional (i.e., that it outweighs the fact that defendant purposefully availed itself of the opportunity to do business in Michigan, and that the cause of action arose out of defendant's activities in Michigan). Burger King, supra at 483; Starbrite, supra at 313. There is also no indication in the record that defendant's case would be unduly hampered "because witnesses or evidence or the defendant [itself] . . . were immobile. . . ." World-Wide, supra at 301.
As Justice Brennan observed in World-Wide, supra at 301: "The defendant has no constitutional entitlement to the best forum or, for that matter, to any particular forum." While Justice Brennan was writing in dissent in World-Wide, the fairness factors he outlined were subsequently adopted by the Court in Burger King, supra at 482-484.
Therefore, we hold that maintaining plaintiff's cause of action in Michigan would not "offend `traditional notions of fair play and substantial justice,'" Int'l Shoe, supra at 316, quoting Milliken, supra at 463, given that (1) defendant established sufficient minimum contacts with Michigan by communicating with Aaronson and shipping the gemstones to him in the state, and (2) defendant has failed to establish that it would otherwise be fundamentally unfair for the state to exercise limited personal jurisdiction in this matter.
III. MUSA Claim
In dismissing count I of plaintiff's complaint, the trial court concluded that the MUSA was inapplicable under the circumstances "inasmuch as the Defendant never entered into a commodity contract nor sold a commodity as defined therein." We disagree.
Section 401 of the MUSA contains the following relevant definitions:
(n) "Commodity" means: (1) Those goods defined as commodities in the commodity futures trading commission act of 1974, (2) those goods commonly classified as commodities within the normal course of business dealings, (3) anything movable which is traded or for which contracts are executed or issued on any board of trade, or commodity exchange or market, or (4) precious metals. The administrator may by rule further define "commodity" or "commodity contract".
"`Administrator' means the corporation and securities bureau of the department of commerce." MCL 451.801(a); MSA 19.776(401)(a).
(o) "Commodity contract" means the transactions dealing in, resulting in, or relating to contracts of purchase or sale of a commodity: for (1) delivery in the future at a specified time or a time to be determined or where delivery is not customarily made, including puts, calls, or any combinations thereof; (2) for present delivery where the value of the commodity is difficult to ascertain except by a person expert in the analysis of the commodity, and the commodity is offered for sale to the general public as an investment; (3) other options; (4) margin contracts; (5) or in general, any interest in an instrument commonly known as a commodity contract. [MCL 451.801(n), (o); MSA 19.776(401)(n), (o).]
Pursuant to the statutory grant of authority, the administrator promulgated Rule 451.801.2(d), which states in pertinent part: "`Goods commonly classified as commodities within the normal course of business dealings' include, but are not limited to: (i) Precious or semi-precious gems or imitations thereof." 1979 AC, R 451.801.2(d)(i).
Resolution of this issue turns on an interpretation of the above-quoted statutory provisions and administrative rule. Interpretation of statutes and administrative rules is a question of law reviewed de novo on appeal. People v. Williams, 226 Mich. App. 568, 570; 576 N.W.2d 390 (1997); Attorney General v. Lake States Wood Preserving, Inc, 199 Mich. App. 149, 155; 501 N.W.2d 213 (1993). The primary goal of judicial interpretation of statutes and administrative rules is to give effect to the intent of the authors. Tryc v. Michigan Veterans' Facility, 451 Mich. 129, 135; 545 N.W.2d 642 (1996); Lake States Wood Preserving, supra at 155. If the language used is clear and unambiguous, a court should not look beyond the plain and ordinary meaning of that language. People v. Hack, 219 Mich. App. 299, 305; 556 N.W.2d 187 (1996); Lake States Wood Preserving, supra at 155.
According to the plain and unambiguous language of Rule 451.801.2(d)(i), "[p]recious or semi-precious gems" are included in the category of those "[g]oods commonly classified as commodities within the normal course of business dealings." The gemstones purchased by Aaronson include sapphires, tanzanite, fancy diamonds, emeralds, alexandrite, and one ruby. We conclude that these gemstones are properly classified as precious or semi-precious gems and thus fall within the statutory definition of a commodity established in MCL 451.801(n); MSA 19.776(401)(n).
We also conclude that given the clear language of MCL 451.801(o)(2); MSA 19.776(401)(o)(2), the transactions at issue should be classified as "commodity contracts" under the MUSA. The parties agree that the gemstones were delivered to Aaronson in Michigan. Further, we believe that the value of such gemstones is not readily ascertained by members of the general public. Rather, the value of these types of gemstones "is difficult to ascertain except by a person expert in the analysis of" gemstones. Id.
There is also evidence in the record that supports the conclusion that defendant's gemstones were being offered "to the general public as an investment." Id. For example, defendant's May 1992 quarterly report contains the following passage:
Westerners who are used to gems as either heirlooms or hedges don't quite understand why the Taiwanese hoard so much gold , and, increasingly, gems when their economy is prosperous and stable. . . . [W]hy, it is asked, does Taiwan have a more active market in under-the-mattress commodities than over the counter stocks? . . . Aware of what's happening throughout Asia, the Taiwanese are buying store-of-value assets. . . . As a result, we expect Taiwan to prove a driving force in the fine gems market this year. [Emphasis added.]
Additionally, defendant's literature is punctuated with investment terminology, including numerous references to both national and global markets. One memorandum, which appears to be for general circulation to defendant's customers, refers to the gemstones held by those individual customers as a "portfolio." Finally, we note that defendant's May 1992 quarterly report analyzes the economic growth potential of the following gemstones: fancy color diamonds, emeralds, rubies, sapphires, tanzanite, and tourmaline. We hold, therefore, that the trial court erred in summarily dismissing count I of plaintiff's complaint.
Other than tourmaline, Aaronson purchased at least one of each of these gemstones.
In ruling that the transactions between Aaronson and defendant were not commodity contracts within the meaning of MCL 451.801(o); MSA 19.776(401)(o), the trial court mistakenly relied on Dep't of Commerce v. DeBeers Diamond Investment, Ltd, 89 Mich. App. 406; 280 N.W.2d 547 (1979). In DeBeers, this Court addressed the question whether the sale of diamonds constituted an "investment contract." Id. at 409. Under the MUSA, an investment contract is a security, MCL 451.801(l); MSA 19.776(401)(l), not a commodity. Accordingly, DeBeers is inapplicable to the case at hand.
For the above-stated reasons, we reverse the trial court's grant of summary disposition. The case is hereby remanded for further proceedings consistent with this opinion.
Reversed and remanded. We do not retain jurisdiction.