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Jess Smith & Sons Commodities, LLC v. Robey

California Court of Appeals, Fifth District
Apr 2, 2009
No. F055667 (Cal. Ct. App. Apr. 2, 2009)

Opinion

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of Kern County No. S-1500-CV-262042, Arthur E. Wallace, Judge.

Noriega & Bradshaw and Donald C. Oldaker for Plaintiff and Appellant.

Law Offices of Richard J. Papst and Richard J. Papst for Defendant and Respondent.


OPINION

VARTABEDIAN, Acting P. J.

This is an appeal from an order granting a motion to quash service of a summons on the basis California lacked personal jurisdiction over the defendant. We affirm the order.

Facts and Procedural History

The facts are not disputed.

Ron Moody, a hay broker from Oregon, made contact with plaintiff and appellant Jess Smith & Sons Commodities, LLC, at the Tulare Farm Show in 2005. Appellant is a hay dealer supplying dairy farms in the Central Valley of California; its primary place of business is in Bakersfield.

Subsequently, Moody contacted defendant and respondent James Robey and asked if he was interested in selling hay to California purchasers. Respondent and Moody first met at respondent’s ranch in Burns, Oregon, and all further negotiations took place there.

Respondent said he was interested in such sales. With Moody’s intervention, appellant’s representative, Jim Oliveira, met with respondent at respondent’s Oregon ranch on two occasions. At the second meeting, the parties entered into the oral contract that is the subject of appellant’s action against respondent.

The contract provided for the sale of 1,500 tons of hay for $165,000. Payment was to be made in four installments over the course of the 2005 season, and the hay was to be made available for pick-up by appellant at respondent’s Oregon ranch. There was a written memorandum setting forth these and a few other terms; appellant’s principal signed this memorandum but respondent did not. Most notable among the additional terms was that the first and third cutting of hay “must exceed 56 TDN w/20 protein.”

In any event, appellant paid for the hay in a timely fashion and sent trucks to pick up about 10 truckloads of 26 tons each. Thereafter, for reasons not disclosed in the record, the trucks stopped coming.

In October of 2007, appellant filed an action in the Kern County Superior Court contending respondent had breached the contract by “failing to deliver alfalfa hay of the quality or in the quantity called for in the Contract.” The complaint also stated causes of action for conversion, intentional misrepresentation, and debt on an open book account. Respondent filed a motion to quash service of the summons. In his attached declaration, respondent stated that his place of business is in Oregon, that the contract was negotiated in Oregon, that the hay was held for delivery in Oregon, and that respondent owns no property and conducts no business in California.

After hearing, the court granted the motion to quash, concluding respondent did not have substantial contacts with California that would support an assertion of jurisdiction by the courts of California.

Discussion

Personal jurisdiction over an out-of-state defendant is of two kinds. The forum court can assert general jurisdiction over a defendant if the defendant has substantial, continuous, and systematic contacts with the forum state. In addition, the forum state can assert specific jurisdiction over an out-of-state defendant if the defendant purposefully availed itself of benefits in the forum state and the particular legal controversy arises out of the defendant’s contacts with the forum state. For specific jurisdiction to be found, in addition to fulfillment of the “purposeful availment” requirement, the exercise of jurisdiction must be found reasonable under the facts of the case. (See Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444-446.)

In this case, appellant asserts the facts support the exercise of personal jurisdiction over respondent in this specific case because respondent has sufficient minimum contacts with California, purposefully availed himself of the protections of California law, and “as a matter of commercial actuality,” engaged in business in California. Because we disagree with these contentions, we do not reach appellant’s further contention that exercise of California jurisdiction is reasonable on the facts of the case.

Appellant accurately summarizes its argument as follows: “The issue presented by this appeal is whether an out of state party who knowingly enters into a contract with a California citizen to sell goods which the defendant knows will enter and be used in California is subject to limited personal jurisdiction in the California courts in an action arising out of a breach of that contract.” While this summary accurately describes appellant’s theory, the theory does not comport with settled law.

The United States Supreme Court has specifically held that foreseeability a product will enter into the forum state, standing alone, is not a sufficient basis for the assertion of jurisdiction over the seller. (See World-Wide Volkswagen v. Woodson (1980) 444 U.S. 286, 297-298.) Nor does merely entering into a contract with a California party subject the nonresident to California jurisdiction. (See Burger King Corp. v. Rudzewicz (1985) 471 U.S. 462, 472.) The California Supreme Court recognized over 25 years ago that World-Wide Volkswagen abrogated California’s previous rule that an isolated sale of goods would preclude jurisdiction “only if the isolated nature of the use ‘conclusively establishes lack of foreseeability that the product will enter the state.’” (Secrest Machine Corp. v. Superior Court (1983) 33 Cal.3d 664, 670.) Yet it is undisputed in the present case that the only connection of respondent to California is that he sold hay knowing it was intended for use in California. That simply is not enough to support California’s exercise of jurisdiction over respondent.

To the extent As You Sow v. Crawford Laboratories, Inc. (1996) 50 Cal.App.4th 1859, 1870, footnote 17, states that the cited federal cases only address general jurisdiction and not specific jurisdiction, we disagree. (See Carretti v. Italpast (2002) 101 Cal.App.4th 1236, 1251-1255 [World-Wide Volkswagen applicable to specific jurisdiction question].)

Given the clear nature of the law and the facts, no point would be served by parsing each of the cases appellant cites in support of its argument. Two such cases are illustrative and will sufficiently demonstrate appellant’s error.

Secrest Machine Corp. v. Superior Court, supra, 33 Cal.3d 664, is set forth by appellant in the following terms: There, “as in the present case, the plaintiff [California] buyer initiated the contact leading to the sale with the out of state seller. [Citation.] The contract was entered into in Virginia, where the seller was located, and as in this case, delivery took place in the seller’s home state. [Citation.] Also, as here, the contract was subject to conditions. In Secrest the conditions were satisfactory performance [citation], in the case at bar they were that the hay be of a specified quality.” Appellant concludes with the assertion that “in those circumstances and since the defendant earned substantial income from the sale, it had engaged in economic activity in California” sufficient to support assertion of jurisdiction by the California courts.

Appellant omits, however, the very facts upon which the Secrest court relied in holding that California’s assertion of jurisdiction survived the World-Wide Volkswagen limitation on foreseeability as the basis for jurisdiction. Thus, appellant fails to note that the Secrest defendant sent its representatives to California to help install the machine, consulted with the buyer about certain modifications to the machine after it had been installed, had sold other, similar machines located in California, had directly solicited further sales from the California buyer after the initial sale, and had regularly advertised its machines in a national trade magazine that was circulated in California. (See Secrest Machine Corp. v. Superior Court, supra, 33 Cal.3d at pp. 670-671.) In the present case, as previously noted, respondent had absolutely nothing to do with California.

Similarly, appellant cites As You Sow v. Crawford Laboratories, Inc., supra, 50 Cal.App.4th 1859, for the proposition that a single sale of a product is sufficient to establish jurisdiction if the nature and quality of defendant’s activity demonstrates that defendant purposefully availed itself of the California market for defendant’s products. Appellant fails to note that the facts of As You Sow involved a paint manufacturer who sold to California distributors over a course of seven years. Although there were only 16 such sales, and those sales amounted to only a tiny percentage of the defendant’s worldwide sales, the court found those sales represented an effort by the defendant to have a presence in the California paint market, “so it could profit from the products’ use in California.” (Id. at p. 1871.) In the present case, there is no evidence respondent sought to profit from the California market for hay or establish his presence in that market. Instead, he merely contracted to sell a season of hay to a buyer who happened to be from California. Under the federal cases, that is not a sufficient basis to assert jurisdiction in California. (Burger King Corp. v. Rudzewicz, supra, 471 U.S. at p. 475.)

Disposition

The order quashing service of the summons is affirmed. Respondent is awarded costs on appeal.

WE CONCUR: WISEMAN, J., HILL, J.


Summaries of

Jess Smith & Sons Commodities, LLC v. Robey

California Court of Appeals, Fifth District
Apr 2, 2009
No. F055667 (Cal. Ct. App. Apr. 2, 2009)
Case details for

Jess Smith & Sons Commodities, LLC v. Robey

Case Details

Full title:JESS SMITH & SONS COMMODITIES, LLC, Plaintiff and Appellant, v. JAMES…

Court:California Court of Appeals, Fifth District

Date published: Apr 2, 2009

Citations

No. F055667 (Cal. Ct. App. Apr. 2, 2009)