Summary
finding personal jurisdiction in Virginia where an employee, then a Virginia resident, entered into an employment contract that required him to move to California to conduct sales for a Virginia company
Summary of this case from Cooper Materials Handling, Inc. v. TegelerOpinion
44121 Record No. 790935.
June 12, 1981
Present: All the Justices.
Execution of contract in Virginia constitutes single business transaction sufficient to confer jurisdiction on its courts under Code Sections 8-81.1 to -81.5 (now Sections 8.01-328 to -330), even when substantially all performance takes place outside the State; notice and minimum-contacts requirements for due process satisfied.
Pleading and Practice — Statutory Construction — Long Arm Statute [Code Sections 8-81.1 to -81.5 (now Sec. 8.01-328 to -330)] — Execution of Contract in Virginia Constitutes Single Business Transaction Sufficient to Confer Jurisdiction on its Courts — Due Process Requirements of Notice and Minimum-Contacts Satisfied.
Plaintiff, a Virginia corporation, is a clothing manufacturer's representative making sales to military installations. Plaintiff and defendant entered into an employment contract whereby defendant became the plaintiff's West Coast representative. When the contract was executed, defendant resided in Virginia. Pursuant to the contract, defendant moved to California. Later defendant's employment terminated, and the present litigation was instituted. Plaintiff asserted claims against defendant for breach of contractual provisions concerning settlement of drawing account payments and of the cost of merchandise samples furnished the defendant by the plaintiff. Process was served on defendant in California through the Secretary of the Commonwealth pursuant to Virginia's long-arm statute, Code Sections 8-81.1 to -81.5 (now Sections 8.01-328 to -330). On defendant's motion, the Trial Court quashed the process and dismissed the plaintiff's motion for judgment. Plaintiff appeals.
Under Code Sec. 8-81.2 (now Sec. 8.01-328.1)(the "long-arm statute"), a Virginia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person's transacting any business in this State. The statute requires only one business transaction in Virginia to confer jurisdiction on its courts. When a contract is made in Virginia, but substantially all performance under the contractual terms takes place outside Virginia, process may be served and jurisdiction exists pursuant to this section for a breach of contract action. The notice and the minimum-contacts requirements of due process are satisfied. Traditional notions of fair play and substantial justice are not offended since defendant has purposefully availed himself of the privilege of conducting business activities within Virginia and thus invoked the benefits and protection of the laws of the State.
Appeal from a judgment of the Circuit Court of the City of Chesapeake. Hon. William H. Hodges, judge presiding.
Reversed and remanded.
Stuart R. Hays for appellant.
J. Randy Forbes (Basnight Creekmore, P.C., on brief), for appellee.
This appeal presents a question of "long-arm" jurisdiction in an action for breach of an employment contract. Process was served on the defendant-employee, Felix L. Dry, a resident of California, through the Secretary of the Commonwealth pursuant to Virginia's "long-arm" statute, Code Sections 8-81.1 to -81.5 (now Sections 8.01-328 to — 330). Upon the defendant's motion, the trial court quashed the process and dismissed the motion for judgment filed by the plaintiff-employer, I. T. Sales, Inc.
The plaintiff, a Virginia corporation, serves as a clothing manufacturer's representative making sales to military installations. On June 20, 1973, the plaintiff and the defendant entered into the contract in question. "[A]t the time of the signing of the Agreement in Virginia," the defendant resided in this state. Under the agreement, the defendant became the plaintiff's West Coast representative; "[h]is duty was . . . to call upon the West Coast military exchanges to make sales." The agreement required the defendant to forward his purchase orders "directly to Virginia . . . care of I. T. Sales, Inc.," at its Norfolk address, with deliveries of merchandise to purchasers made "directly via the manufacturer."
This statement is contained in a letter memorandum submitted by the plaintiff's counsel to the trial court. By written stipulation signed by counsel for both parties and filed in the record, the parties agreed that the letter of the plaintiff's counsel, together with a letter memorandum submitted by the defendant's counsel, "contained the agreed statement of facts . . . and should constitute . . . the written statement of facts and other incidents of trial pursuant to Rule 5:9." Yet, at the bar of this court, the defendant's counsel represented that "[n]o statement was ever presented to the trial judge . . . that the contract was executed in Virginia originally."
Pursuant to the agreement, the defendant moved to California. At some time undisclosed by the record, his employment terminated, and the present litigation was instituted. In its motion for judgment, the plaintiff asserted claims against the defendant for the alleged breach of contractual provisions concerning settlement of drawing account payments and of the cost of merchandise samples furnished the defendant by the plaintiff.
As posed by the defendant, the question for decision is:
Where a contract is made in the State of Virginia, but substantially all of the performance under the terms of the contract takes place outside the State of Virginia, does [sic] service of process and jurisdiction lie pursuant to Section 8-81.2 of the Code of Virginia, 1950, as amended, now Section 8.01-328.1 for breech [sic] of such contract [?]
We answer this question affirmatively. Under Code Sec. 8-81.2 (now Sec. 8.01-328.1), cited in the above quotation, a Virginia court "may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action arising from the person's . . . [t]ransacting any business in this State."
In another "long-arm" case decided today, Associates Fin. Serv. v. McPeek, 222 Va. 176, 278 S.E.2d 847 (1981), the McPeeks, Virginia residents, went to Maryland and purchased a truck. They signed a note and financed the purchase through Associates. After they had made several payments by mail, the McPeeks defaulted in the payment of their loan. Associates secured a judgment against them in Maryland based upon process served in Virginia. Associates then brought action in Virginia on the Maryland judgment. The lower court held the Maryland judgment was not entitled to full faith and credit because "the McPeeks' contacts with Maryland were so negligible that the maintenance of the Maryland suit offended 'traditional notions of fair play and substantial justice.' " 222 Va. at 177, 278 S.E.2d at 848. Holding the Maryland judgment was entitled to full faith and credit, we reversed. In the course of our opinion, we said:
The Supreme Court has found a single business transaction sufficient to confer jurisdiction. In McGee v. International Life Insurance Co., 355 U.S. 220 (1957), a Texas insurance company delivered an insurance contract to a California resident who paid the premiums by mail. In a suit on the contract, California process was served on the Texas insurer by registered mail. The Court, noting that the insurer "was given a reasonable time to appear and defend on the merits after being notified of the suit", id. at 224, concluded that both the notice and the minimum-contacts requirements of due process had been satisfied. Citing McGee, we have held that Virginia's longarm statute "is a single act statute requiring only one [business] transaction in Virginia to confer jurisdiction on its courts." Kolbe, Inc. v. Chromodern, Inc., 211 Va. 736, 740, 180 S.E.2d 664, 667 (1971).
222 Va. at 179, 278 S.E.2d at 849.
In the Chromodern case, the single business transaction occurring in Virginia consisted of the procuring of a purchase order from a Virginia corporation by the agent of a California manufacturer for the sale of furniture to be delivered to a purchaser in North Carolina. Reversing the trial court's dismissal of the Virginia corporation's motion for judgment against Chromodern, the California manufacturer, we said:
Since Chromodern has purposefully availed itself of the privilege of conducting business activities within Virginia and thereby invoked the benefits and protection of the laws of this State, it would not offend traditional notions of fair play and substantial justice to require it to submit to the jurisdiction of the courts of this State.
211 Va. at 741, 180 S.E.2d at 668.
In similar vein, we do not believe it would offend basic concepts of fairness and justice to require the present defendant to submit to the jurisdiction of this state's courts. By entering into his employment contract in Virginia, even though the agreement required him to move to California, the defendant conducted a business transaction in this state that was sufficiently substantial to bring his case within the provisions of Code Sec. 8-81.2 (now Sec. 8.01-328.1).
For the reasons assigned, the judgment of the trial court will he reversed, the plaintiff's motion for judgment will be reinstated, and the case will be remanded for further proceedings.
Reversed and remanded.