Opinion
No. 60634-4-I.
June 2, 2008.
Appeal from a judgment of the Superior Court for Whatcom County, No. 07-2-01186-9, Ira Unrig, J., entered August 24, 2007.
Affirmed by unpublished opinion per Agid, J., concurred in by Schindler, C.J., and Becker, J.
Management Recruiters of Lynden, Inc. ("Management Recruiters"), appeals the trial court's order dismissing its claims for breach of contract against Custom Glass Distributors, Inc. ("Custom Glass"), for lack of personal jurisdiction. Management Recruiters contends that the trial court erred because Custom Glass "reached out beyond Nevada" and agreed to pay for recruiting services that would be rendered in Washington by a Washington corporation. Because Management Recruiters fails to establish that Custom Glass purposefully acted in Washington when it received an unsolicited call from a recruiter and agreed to pay the recruiter to provide the name of a job candidate in Michigan for employment in Nevada, we affirm.
FACTS
Racquel Hansen was a recruiter working for Management Recruiters, a Washington corporation whose residence and principal place of business is Whatcom County. In November 2006, Hansen learned from the National Glass Association website that Custom Glass, a Nevada corporation, was seeking to hire project managers/estimators. Hansen then telephoned Custom Glass and spoke with Kevin DePaoli. She told DePaoli that she was a recruiter and worked for Management Recruiters in Washington. DePaoli told her that he needed to hire two or three people to be commercial estimator/project managers.
Hansen then told DePaoli that, for a fee, she would provide the name of a candidate and set up an interview. According to Hansen, DePaoli accepted this offer and Hansen gave him the name of the candidate, Scott Love, a Michigan resident. According to DePaoli, he did not agree to a fee, but agreed only to allow Hansen to give his phone number to Love. Hansen then told DePaoli that she would set up an interview, but he told her he was busy and to call him back later or speak with someone else at his office who could provide the information she needed about salary and benefits.
That same day, Hansen contacted Love and then spoke again with DePaoli. She told DePaoli that Love would call him on November 26, 2006. She also sent DePaoli Love's resume and the results of a reference check.
According to Love, he did not seek the services of Management Recruiters. He believed Hansen learned about him from a resume he may have inadvertently postedon the internet while applying for a position at an employment website. Hansen contacted him and told him that she worked on behalf of companies looking for specific qualified people and wanted to put him in touch with a company that was interested in him. He gave his consent for the company to contact him. Hansen then called him back and asked him if he minded calling the company, Custom Glass, in Nevada. She also told him not to discuss money, benefits, or anything else other than his qualifications. He called the company and spoke with DePaoli and discussed all aspects of employment, including salary and benefits. Hansen continued to call him, asking for updates and encouraging him not to discuss wages.
Love ultimately accepted a job offer from Custom Glass and began working there on December 12, 2006. Custom Glass refused to pay Hansen the recruiting fee. After Love was hired, Hansen called him and told him that she had other employment opportunities for him if he was not happy at Custom Glass. He told her that he did not want her to continue to contact him.
Management Recruiters sued Custom Glass for breach of contract. Custom Glass moved to dismiss for lack of personal jurisdiction. The trial court granted the motion and dismissed the claims.
DISCUSSION
Management Recruiters contends the trial court erred by dismissing its claim for lack of personal jurisdiction. It argues that Washington courts have jurisdiction over Custom Glass because Custom Glass "reached out beyond Nevada" and agreed to pay for substantial services that would be rendered in Washington by a Washingtoncorporation. Management Recruiters further argues that exercising jurisdiction in Washington is consistent with notions of fair play and substantial justice because Custom Glass benefited from Washington's laws and contracted for a service from a Washington corporation that was not "de minimis."
When the trial court considers matters outside the pleadings on a motion to dismiss for lack of personal jurisdiction, we review the trial court's ruling under the standard of review for summary judgment. Thus, our review is de novo, viewing the facts and reasonable inferences drawn from the facts in the light most favorable to the nonmoving party. The plaintiff has the burden of establishing that jurisdiction exists and need only show a prima facie case. For purposes of determining jurisdiction, we treat the allegations in the complaint as established.
CTVC of Hawaii, Co., Ltd. v. Shinawatra, 82 Wn. App. 699, 707-08, 919 P.2d 1243, 932 P.2d 664 (1996), review denied, 131 Wn.2d 1020 (1997).
Id. at 708.
Id.
Id.
A Washington court may exercise jurisdiction over a nonresident defendant when (1) the defendant is "transacting substantial and continuous business" that gives rise to a legal obligation, regardless of whether the cause of action is related to the defendant's Washington contacts (general jurisdiction) or (2) the defendant's limited contacts give rise to the cause of action (specific jurisdiction). Here, Management Recruiters asserts that jurisdiction is proper based on Custom Glass's limited contacts which gave rise to the breach of contract claim. Thus, its claim is one of specific jurisdiction. Washington's "long arm" statute provides, in part, for specific jurisdiction over a nonresident defendant:
Id. at 709.
(1) Any person, whether or not a citizen or resident of this state, who in person or through an agent does any of the acts in this section enumerated, thereby submits said person . . . to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of said acts:
(a) The transaction of any business within this state;
. . . .
(3) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him is based upon this section.
Our courts have held that under the long-arm statute, a Washington court may exercise personal jurisdiction over a foreign entity if the following factors are satisfied:
"(1) The nonresident defendant or foreign corporation must purposefully do some act or consummate some transaction in the forum state; (2) the cause of action must arise from, or be connected with, such act or transaction; and (3) the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice, consideration being given to the quality, nature, and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, and the basic equities of the situation."
Shute v. Carnival Cruise Lines, 113 Wn.2d 763, 767, 783 P.2d 78 (1989) (quoting Deutsch v. W. Coast Mach. Co., 80 Wn.2d 707, 711, 497 P.2d 1311, cert. denied, 409 U.S. 1009 (1972)).
Custom Glass appears to concede that the second factor has been established and that the contract dispute arose out of the alleged contacts. Thus, we determine whether Management Recruiters has established the other two factors: that Custom Glass purposefully acted in Washington and that exercising jurisdiction over it does not offend notions of fair play and substantial justice.
I. Purposeful Activity
Management Recruiters argues that the first factor is satisfied because Custom Glass purposefully consummated a business transaction that called for continuing obligations between Custom Glass and Management Recruiters. It contends that by gathering information about a potential job candidate, providing information to Custom glass and arranging an interview that ultimately led to Custom Glass's hiring of that candidate, Management Recruiters provided services in Washington from which Custom Glass benefited and for which it agreed to pay. Custom Glass responds that two cold calls from a Washington recruiter in which Custom Glass agreed to accept the name of a potential job candidate in exchange for a finders' fee does not amount to purposeful contact or create a business relationship with continuing obligations to a Washington corporation.
To satisfy this factor, the plaintiff must establish that the defendant "'purposefully avail[ed] itself of the privilege of conducting activities within the forum state, thereby invoking the benefits and protections of its laws.'" The focus is on the defendant's activities and the sufficiency of the contacts and is determined by the quality and nature of the activities. A defendant may purposefully act in Washington by doing business in Washington, including "'the initiation of a transaction outside the state in contemplation that some phase of it will take place in [Washington].'" Even if the defendant did not initiate contact with Washington, the defendant may still "purposefully act" if a business Page 7 relationship later arises. But mere execution of a contract with a resident of this jurisdiction alone does not establish the purposeful act requirement. Rather, the court must examine the circumstances of the entire transaction, including earlier negotiations, contemplated future consequences, the contract's terms, and the parties' actual course of dealing.
CTVC, 82 Wn. App. at 710 (alteration in original) (quoting Walker v. Bonney-Watson Co., 64 Wn. App. 27, 34, 823 P.2d 518 (1992)).
Id.
Id. at 711 (quoting Griffiths v. Sprague Stevedoring Co. v. Bayly, Martin Fay, Inc., 71 Wn.2d 679, 684, 430 P.2d 600 (1967)).
Id.
MBM Fisheries, Inc. v. Bollinger Mach. Shop, 60 Wn. App. 414, 423, 804 P.2d 627 (1991) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478-79, 105 S. Ct. 2174, 2185-86, 85 L. Ed. 2d 528 (1985)).
Id.
In MBM Fisheries, Inc. v. Bollinger Machine Shop Shipyard, Inc., the court held that a Louisiana shipbuilder was not subject to jurisdiction in Washington when a Washington corporation took one of its boats to the shipbuilder in Louisiana for a repair estimate, both parties negotiated a contract for the repair work in Louisiana, and a principal of the Washington corporation returned to Louisiana to pick up the boat. In determining that the shipbuilder did not purposefully act in Washington, the court considered the entire business transaction, noting that the Washington corporation sought out the shipbuilder in Louisiana, the parties negotiated the contract in Louisiana, the work was performed in Louisiana, the vessel was delivered in Louisiana, the contract did not contemplate that the shipbuilder have any continuing obligations tying it to Washington, and there was no ongoing business relationship. As the court concluded:
60 Wn. App. 414, 424, 804 P.2d 627 (1991).
Id.
The mere fact that [the nonresident defendant] knew that the subject of the contract might be used in Washington or that its failure timely to return the subject of the contract might cause damage to MBM in Washington is insufficient to establish purposeful interjection into the Page 8 forum. . . .
Id.
Similarly here, the Washington corporation sought out the Nevada company, the job candidate was solicited outside of Washington for work to be performed in Nevada, and the agreement to provide the candidate's name and set up an interview did not contemplate any continuing obligations of Custom Glass tying it to Washington. The circumstances of the entire transaction demonstrate that Custom Glass's contact amounted to the mere execution of a contract with a Washington resident, not purposeful activity in Washington.
See id.
First, there were no prior negotiations. Hansen found both Custom Glass and the job candidate on her own on the internet before she even contacted Custom Glass. While not entirely clear from the record, it appears that she also spoke with the job candidate before she called Custom Glass. Thus, there were no prior negotiations for her to find this candidate: she simply cold-called Custom Glass and offered to give them a name for a fee.
See Clerk's Papers at 28 (stating that she disclosed Scott Love's name on the initial call, but also stating that she made the second call "[a]fter talking to Scot[t] Love"). In any event, she had gathered enough information about Love's qualifications before she ever contacted Custom Glass.
Nor were there any contemplated future consequences or contract terms that involved contact in Washington. The candidate was not interviewed in Washington, nor was the position he was considering in Washington. While Management Recruiters contends that Hansen did the additional work of gathering more information about the position, setting up an interview, checking references, and sending a resumein Washington, the record does not establish that these services were contemplated by the agreement.
Hansen's declaration states:
6. I explained that I would provide the name of the candidate and try to set up an interview. I told Mr. Depoali [sic] that I would do so for a fee equal to 30% of the candidate's first year's compensation. I also explained that no fee would be owed for a candidate that Defendant did not hire.
7. Mr. De[P]aoli accepted this offer.
8. After Mr. Depoali [sic] accepted the offer I disclosed Scott Love's name and told him I would try to set up an interview.
9. Mr. Depoali [sic] told me he was busy but that I could call him back later or speak with Caroline Arnold at his office and she could provide information I needed regarding salary and benefits. . . .
She does not state that conducting reference checks or providing a resume were part of the agreement. Rather, her declaration simply says she performed these services. And while she stated that DePaoli accepted her offer to set up an interview, she further states that when she told him she would try to set up the interview, he told her he was too busy and directed her to speak with someone else, not about the interview but about the salary and benefits for the position. Thus, the record is not clear that DePaoli actually agreed to have this service provided. But even if the agreement contemplated that Hansen would set up an interview, this service cannot be fairly characterized as a future consequence involving contact in Washington. She did so by simply calling Love and calling DePaoli back on the same day they made the agreement.
Management Recruiters further argues that another contemplated future consequence involving work in Washington was the fact that Hansen called anotherCustom Glass employee at DePaoli's direction to obtain salary and benefit information for the position. But this does not contemplate future services: DePaoli did not need this information nor did he ask her to obtain it or pass it on to the job candidate. Indeed, he discussed salary and benefits directly with the candidate.
Nor do the terms of the agreement or the parties' actual course of dealing suggest that the agreement amounted to purposeful contact in Washington. As noted above, the agreement was only to pay a finders' fee in exchange for a name and an interview appointment. Hansen found the name on the internet before even contacting Custom Glass, the interview was conducted outside of Washington, and Management Recruiters' only involvement in the interview was Hansen's phone call to Love in which she told him to call DePaoli.
Finally, the parties' actual course of dealing involved minimal contact with Washington. Management Recruiters made two calls to Custom Glass about a job candidate in Michigan for a job in Nevada, made another call to a Michigan resident, sent a resume, and conducted a reference check. Custom Glass received two calls from a Washington recruiter in which it agreed to accept the name of a job candidate for a finders' fee, directed the recruiter to another Custom Glass employee for information about the salary and benefits for the position, interviewed the Michigan job candidate outside of Washington, and hired the candidate for work in Nevada. Thus, Management Recruiters has failed to establish that Custom Glass purposefully acted in Washington. Rather, as in MBM Fisheries, Custom Glass's contacts amounted to "amere execution of a contract with a resident of the forum state," which cannot alone satisfy the purposeful act requirement.
The record is unclear whether Hansen conducted the reference check before she made the initial call to Custom Glass.
60 Wn. App. at 423. See also CTVC v. Shinawatra, 82 Wn. App. at 712-13 (Thai national did not purposefully avail himself of Washington law by his presence in Washington to partially negotiate a contract that was also negotiated in Thailand).
The cases cited by Management Recruiters are distinguishable. InSorb Oil, we held that the trial court had personal jurisdiction over a nonresident corporation when it placed telephone orders for products distributed by a Washington corporation over a 20 month period even though the products were shipped directly from Indiana. We held that the fact that the goods were shipped from Indiana rather than Washington was irrelevant and that the nonresident corporation engaged in purposeful conduct in Washington when it placed several orders through the Washington corporation. But here, the alleged transaction did not involve a course of conduct over time during which products were purchased from a Washington company. Rather, it involved two telephone calls in one day from a Washington recruiter in which a Nevada corporation agreed to pay a finders' fee if the recruiter provided the name of a job candidate and the candidate was hired. Additionally, unlike in Sorb Oil where the orders entailed "more than de minimis amounts," the contracted-for services rendered here were "de minimis." They amounted to a recruiter providing a name that she found on the internet and making a phone call asking the job candidate to call the employer.
See Sorb Oil Corp. v. Batalla Corp., 32 Wn. App. 296, 647 P.2d 514 (1982); Precision Lab. Plastics, Inc. v. Micro Test, Inc., 96 Wn. App. 721, 981 P.2d 454 (1999); Griffiths Sprague Stevedoring Co., 71 Wn.2d 679.
Id. at 301.
Id.
Management Recruiters also cites Precision Laboratory Plastics, Inc. v. Micro Test, Inc., where the court held that Washington had jurisdiction over a Georgia corporation when it bought Washington-made goods. The court concluded that the Georgia corporation was not merely a buyer of Washington products, but transacted business within the state. The court noted that the two corporations negotiated an on-going business relationship, culminating in a bilateral contract that required the Washington company to retool its machinery to custom manufacture products for the Georgia customer. Thus, the Georgia company formed a contract that contemplated future consequences and created a continuing relationship with ongoing obligations. But here Custom Glass did not enter into a long-term contract with bilateral consequences and therefore create continuing relationships and obligations in Washington. Rather, at best it "merely purchased" services from a Washington corporation which, as the court in Precision Laboratories said, might be an argument against personal jurisdiction.
96 Wn. App. 721, 981 P.2d 454 (1999).
Id. at 727.
Id.
Id. at 726.
Id. at 727.
In Sorb Oil and Precision Laboratories, the court noted that which party initiated the contact is irrelevant if a business relationship later arose from it. Unlike the arrangement in both of these cases, Custom Glass did not initiate contact. That fact is relevant here because no business relationship arose from the initial contact. Thus, the fact that Custom Glass did not solicit Management Recruiters and only came into contact with Hansen because she initiated contact after learning about its employmentneeds on the National Glass Association website is of significance here.
Id. at 726; 32 Wn. App. at 299.
In Washington Equipment Manufacturing Co. v. Concrete Placing Co., the court held that an Idaho company did not purposefully avail itself of Washington law, explaining that this determination "frequently turns on which party solicited the agreement and where." The court described the Idaho company's contacts with Washington, including phone calls, equipment delivery in Spokane, and inspection visits to the Spokane manufacturing plant, but concluded these contacts were "incidental to the dispute." Rather, "[o]f more significance" to the court was that the Washington company solicited the sale from the Idaho company and the contract was entered into in Idaho. Similarly here, because the Washington company solicited Custom Glass, Custom Glass did not avail itself of Washington law or purposefully act in Washington.
85 Wn. App. 240, 247, 931 P.2d 170 (1997).
Id.
Id.
See also MBM Fisheries, 60 Wn. App. at 424.
Management Recruiters also cites Griffiths Sprague, where the court held that jurisdiction was proper over a California insurance broker when, at the California broker's request, a Washington broker procured insurance from a London broker, paid the premiums to the London broker and sought to recover the premium amount from the California broker. The court concluded that by ordering insurance by and through the Washington broker, the California broker overtly performed acts making it a participant in a business transaction in Washington even though the parties contemplated that the insurer might be a foreign agency. But here, unlike the California broker in Griffiths Sprague, Custom Glass did not initiate contact with or solicit business from a Washington party. As discussed above, because Custom Glass did not initiate contact in Washington and there was no ongoing business relationship beyond that initial solicitation, it did not purposefully act in Washington.
71 Wn.2d 679, 430 P.2d 600 (1967).
Id. at 685.
See MBM Fisheries, 60 Wn. App. at 424; Wash. Equip. Mfg., 85 Wn. App. at 247.
II. Fair Play and Substantial Justice
Management Recruiters must also establish that the assumption of jurisdiction does not offend "traditional notions of fair play and substantial justice." This determination involves consideration of "the quality, nature, and extent of the defendant's activity in Washington, the relative convenience of the plaintiff and the defendant in maintaining the action here, the benefits and protection of Washington's laws afforded the parties, and the basic equities of the situation."
CTVC, 82 Wn. App. at 720.
Id.
As discussed above, the quality, nature, and extent of Custom Glass's activity in Washington is minimal, amounting only to two calls from a Washington recruiter. Weighing the relative convenience of the parties in maintaining the action in Washington dictates against jurisdiction: most of the witnesses are in Nevada (DePaoli, Love, other employees of Custom Glass) and the dispute is over whether DePaoli agreed to a finders' fee, which allegedly occurred during a conversation over the phone between the parties in both states. The benefits and protections of each state's laws are largely equal in this case: Washington has an interest in protecting its corporations from breaches of contract, and Nevada has an interest in protecting its employers from unsolicited recruiting contracts. But overall, as detailed above, the equities dictate against exercising Washington jurisdiction over Custom Glass.
The parties should note that our decision does not prevent Management Recruiters from pursuing its claim against Custom Glass in the Nevada courts.
III. Attorney Fees
Custom Glass requests attorney fees under RAP 18.1 and RCW 4.28.185, as the prevailing party. RCW 4.28.185(5) provides:
In the event the defendant is personally served outside the state on causes of action enumerated in this section, and prevails in the action, there may be taxed and allowed to the defendant as part of the costs of defending the action a reasonable amount to be fixed by the court as attorneys' fees.
That section includes causes of action arising out of the transaction of business within this state. But an award of fees under this statute is discretionary, and under the circumstances here, we conclude that an attorney fees award is not appropriate where the plaintiff remains uncompensated for an otherwise actionable claim.
RCW4.28.185(1)(a).
We affirm the order of dismissal and deny attorney fees to Custom Glass.