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Personal Jurisdiction Requires More Than Fortuitous Contacts

Posted by Thomas P. Howard | Sep 13, 2021 | 0 Comments

By James Juo.

In analyzing specific personal jurisdiction, courts look to whether there are sufficient minimum contacts, and whether the exercise of jurisdiction is reasonable. The minimum contacts inquiry with regard to specific jurisdiction is essentially a two-part test: (1) whether the defendant purposefully availed himself of the privilege of conducting business in the forum state, and (2) whether the litigation arises out of or relates to the defendant's forum-related contacts.

The Colorado Supreme Court in Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187 (Colo. 2005) held that there was no personal jurisdiction notwithstanding numerous communications that defendant AGD [a Russian corporation] sent to the plaintiff in Colorado because “AGD's attenuated and fortuitous contacts, coupled with the remote nexus between AGD's Colorado contacts and this litigation [involving contracts over a Russian diamond deposit], fail to raise an inference of specific jurisdiction over AGD.” Id. at 1200.

In Archangel, the Colorado Supreme Court adopted the Tenth Circuit's analysis in Far West Capital, Inc. v. Towne, 46 F.3d 1071 (10th Cir. 1995).

There, Towne, the defendant and a Nevada resident, owned property in Nevada that the Utah plaintiff, Far West Corporation, had an interest in developing. [Far West, 46 F.3d] at 1073. The negotiations took place in Nevada, but Towne sent several communications, including letters and faxes, to Far West in Utah. Id. The parties also set up an escrow account in Utah. Id. As the negotiations progressed, Towne also hired a Utah resident as her consultant, who in addition to lending his expertise about geothermal resources, picked up drafts of leases from Far West in Utah and forwarded the drafts to Towne. Id. Towne and Far West eventually entered into a lease agreement which required that any disputes arising from the contract be governed by Nevada law. Id. Shortly after entering into the agreement, Far West negotiated a sub-lease with a third party to build a power plant on the property. Far West, 46 F.3d at 1074. As part of the financing arrangement relating to the sublease, the third party required certain stipulations between Far West and Towne. Id. After Towne refused to agree to certain stipulations, Far West brought suit in Utah federal court alleging breach of contract and several business torts including bad faith breach of contract, intentional interference with contractual relations, and economic duress. Id.

Archangel, 123 P.3d at 1199 (discussing the facts of the Tenth Circuit's Far West decision).

“[T]he mere allegation that an out-of-state defendant has tortiously interfered with contractual rights or has committed other business torts that have allegedly injured a forum resident does not necessarily establish that the defendant possesses the constitutionally required minimum contacts. Instead, in order to resolve the jurisdictional question, a court must undertake a particularized inquiry as to the extent to which the defendant has purposefully availed itself of the benefits of the forum's laws.”

Archangel, 123 P.3d at 1199–1200 (quoting Far West, 46 F.3d at 1079) (emphasis added).

Applying this narrow interpretation of the Calder “effects” test, the [Tenth Circuit] affirmed . . . that the exercise of Utah's jurisdiction over Towne would violate due process even though Far West alleged intentional torts and that it suffered injury in Utah. See id. at 1075. Specifically, the Tenth Circuit concluded that . . . Towne's actions were not “expressly aimed at” Utah and Utah was not the “focal point” of the tort and its injury. Far West, 46 F.3d at 1080. The court summarized the circumstances in that case by noting, “[i]n short, there is no indication that Utah had anything but a fortuitous role in the parties' past dealing or would have any role in their continuing relationship.” Id.

Archangel, 123 P.3d at 1200 (discussing the Tenth Circuit's legal conclusion in Far West).

Thus, even though the defendant had sent communications to the plaintiff in Utah in negotiating the contract, and the parties had set up an escrow account in Utah—the Tenth Circuit concluded that defendant's actions were not “expressly aimed at” Utah. Far West, 46 F.3d at 1080. Utah was not the “focal point” of the tort and its injury, notwithstanding any “fortuitous” past contacts in the state. Id.

Adopting the Tenth Circuit's Far West approach, the Colorado Supreme Court in Archangel concluded there was no personal jurisdiction over the Russian defendant AGD. Archangel, 123 P.3d at 1200. Even though the Russian defendant had directed numerous communications to the plaintiff in Colorado in connection with the disputed contracts over a Russian diamond deposit, they were attenuated and fortuitous contacts that failed to establish the purposeful availment required to find minimum contacts for specific jurisdiction. Id. at 1195. Such attenuated and fortuitous communications with a Colorado resident do not support finding that the Russian defendant had purposely availed itself of the privilege of conducting business in Colorado. Id. at 1200.

On the other hand, had the Russian defendant broadly targeted Colorado for its business, rather than engaged in a one-off negotiated transaction, then the outcome may have been different, especially in view of the recent U.S. Supreme Court decision in Ford Motor Co. v. Montana Eighth Judicial District Court, 592 U.S. __, 141 S. Ct. 1017 (2021) (holding that some relationships will support jurisdiction without a strict causal showing).

The litigation attorneys at Thomas P. Howard, LLC can evaluate whether your case has more than fortuitous contacts for personal jurisdiction.

About the Author

Thomas P. Howard

Thomas Howard is an experienced trial lawyer that handles intellectual property litigation nationwide, including copyright, trademark, trade secret and patent litigation, as well as complex civil litigation, including breach of contract, interference with contract, breach of fiduciary duty, conspiracy, fraud and fraudulent transfer of assets.


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