IN THE MISSOURI COURT OF APPEALSNo. WD 75137 __________________________________________________________________
16th Judicial Circuit, Division 18 Case No. 1116-CV16343
The Honorable Brian C. Wimes, Circuit Judge
BRIEF OF RESPONDENT KENNETH B. McCLAIN
GREGORY LEYH, P.C.
Gregory Leyh, #42283 104 N.E. 72nd Street, Suite I Gladstone, Missouri 64118 (816) 283-3380
(816) 283-0489 (Facsimile) gleyh@leyhlaw.com
Jurisdictional Statement….……………………………………...…………………2
Argument I-V..……………………………………………………………..………4
The trial court did not err in holding that the parties’
choice of law was relevant but not dispositive because the
choice of law provision does not alone provide a basis
for personal jurisdiction…………………………………………...……….………4
Standard of Review……………………….………………………………….….…4
The trial court correctly stated New York law providing that
choice of law provisions do not, by themselves, expose
a party to personal jurisdiction (Point I)………………………...…………………4
The trial court did not err in finding that Respondent could
not have reasonably being haled into a New York court
(Points II and III)………………………………………………...……….………..6
Standard of Review……………………………………………………….….…….6
The trial court correctly analyzed facts relating to Respondent’s
conduct and ruled that he did not transact business within
New York (Points II and III)……………………………………………………….7
ii
The trial court did not err by shifting the burden from
Respondent to Appellant since the trial court found
that Respondent met his burden by providing the
clearest and most satisfactory evidence (Point IV)………………………...………9
Standard of Review………………………………………………………….……10
The trial court did not shift the burden of proof and
HWI’s conclusion to the contrary is incorrect (Point IV)………………………...10
The trial court did not err by finding that Respondent’s
contacts with New York are insufficient to satisfy minimum
contacts under due process requirements (Point V)………………………………11
Standard of Review………………………………………………………….……11
The trial court’s due process analysis is correct based on
the evidence in the record (Point V)……………………………………….......…11
Conclusion………………………………………………………….…………….13
310 S.W.3d 227, 231 (Mo. Banc 2010)………………………….....4, 10, 11
M&D Enterprises, Inc. v. Fournie,
600 S.W.2d 64 (Mo. App. S.D. 1980)…………………………………….13
Murphy v. Carron,
Office Supply Store.com v. Kansas City School Board,
334 S.W.3d 574 (W.D. Mo. 2011)………………………………..…5, 6, 13
Peoples Bank v. Frazee,
318 S.W.3d 121, 127 (Mo. 2010)………………………………4, 10, 11, 12
Posven v. Liberty Mutual Ins. Co.,
303 F.Supp.2d 391, 397 (S.D.N.Y. 2004)………………………………….5
Premier Lending Services, Inc. v. J.L.J. Associates, et al.,
924 F.Supp. 13, 17 (S.D.N.Y. 1996)……………………………………….5
Sunward Electronics, Inc. v. McDonald,
362 F.3d 17, 22 (2d Cir. N.Y. 2004)…………………………………..…8, 9
Three Five Compounds, Inc. v. Scram Technologies, Inc.,
2011 U.S. Dist. LEXIS 134530 (S.D.N.Y. 2011)…………………………..5
iv
825 F.Supp. 594, 596 (S.D.N.Y. 1993)…………………………………….5
RULES, STATUTES AND OTHER AUTHORITES Missouri Constitution, Article V, Section 3……………………………...………. 2 Missouri Supreme Court Rule 84.04(c)….…………….………………………….2 Missouri Supreme Court Rule 84.04(f)……..……….…………………………….2 N.Y. C.P.L.R. § 302(a)(1)…………………………………………………...…8, 10
1
Statement of the Issues
Hope’s Windows, Inc. (“HWI”) asserts five points on appeal. This court
should affirm the judgment in all respects.
Each of HWI’s points on appeal concerns the trial court’s narrow holding
that Respondent did not purposefully avail himself of the privileges of conducting
business in the State of New York, and Respondent’s contacts with the State of
New York were insufficient to satisfy minimum contacts under due process
requirements. HWI’s first point is that the trial court erred by holding that a
choice of law provision was relevant but not dispositive to a determination of
whether a non-domiciliary has transacted business within a state. The trial court
correctly applied the law of the State of New York, and HWI’s first point does not
warrant relief. HWI’s second point hinges on a conclusion that Respondent was a
sophisticated party and therefore an objective rather than subjective standard
should have been used. Although HWI never asked the trial court to adjudicate
the issue of party sophistication, and therefore the second point has not been
preserved, the trial did in fact apply an objective standard to the facts. HWI’s
second point misses its mark and does not warrant relief. HWI’s third point is that
a party executing and mailing a contract to the State of New York should be found
to have transacted business in New York. HWI’s third point is contrary to law and
does not warrant relief. HWI’s fourth point is that the trial court erred by shifting
the burden of proving the propriety of New York’s assertion of personal
jurisdiction from Respondent to Appellant, and its fifth point is that the trial
2
court’s due process analysis reflects error. HWI’s fourth and fifth points do not
warrant relief.
Jurisdictional Statement
HWI appeals from an Order/Judgment filed in Jackson County, Missouri
that followed a hearing and submission of affidavits and documents. Respondent
agrees that because Jackson County, Missouri is within the district of this
appellate court this appeal is within the appellate jurisdiction of this court under
Article V, Section 3 of the Missouri Constitution. (App. Brief at 1)
Statement of Facts Relevant to This Appeal
Pursuant to Rule 84.04(c) and (f), Respondent objects to HWI’s statement
of facts as inaccurate and incomplete. This case is about whether Respondent, a
Missouri resident, purposefully availed himself in 2007 of the privileges of
conducting business in the State of New York. HWI devotes most of its statement
of facts to actions taken by its own employees and officers in 2008, and
substantially ignores the limited facts relating directly to Respondent’s conduct.
A contract was made in 2007 between HWI and Ed’s Renovation to
provide windows, doors and hardware for use at a home owned by Respondent.
(LF 17). The contract was negotiated in Missouri. (A4). Respondent signed his
name to the contract between HWI and Ed’s Renovation in Missouri. (Tr. 23-23).
Respondent sent one payment to New York in 2007. (Tr. 17). Respondent never
spoke to any person employed by or representing HWI before the contract was
signed. (Respondent’s App. A1 at ¶ 4). Respondent never communicated by
3
letter or email to any person employed by HWI before the contract was signed.
(Respondent’s App. A1 at ¶ 5). Respondent never personally bought any products
or services from HWI, and has never had any personal or business dealings with
HWI. (Respondent’s App. A1 at ¶ 6). Respondent was not personally involved in
the purchase of any products or services from HWI. (Respondent’s App. A2 at ¶
7). Respondent is not an owner, member or employee of Ed’s Renovation, and
has no financial or other interest in Ed’s Renovation. (Respondent’s App. A2 at ¶
8). Respondent never personally visited HWI in Jamestown, New York.
(Respondent’s App. A2 at ¶ 9). Respondent never transacted any business in
Chautauqua, New York. (Respondent’s App. A2 at ¶ 10).
Respondent objected to the admissibility of HWI’s evidence at the hearing.
Appellant’s Exhibits 1, 2 and 3 were offered without foundation and are hearsay.
(Tr. 22). Appellant’s Exhibits 9, 10, and 11 are emails sent by HWI to
Respondent in 2008, more than one year after the contract between HWI and Ed’s
Renovation was executed. (Tr. 22, 28-30, 36). Appellant’s Exhibits 9, 10, and 11
were offered without any foundation. (Tr. 22, 28-30, 36). Respondent objected
because these Exhibits were hearsay and irrelevant to a determination of
Respondent’s conduct regarding purposeful availment in 2007. (A30-32).
HWI begins its statement of facts by describing the testimony by affidavit
of Richard Odor, who stated that in May of 2008 he was a sales representative for
HWI, was present at the McClain Pool House in Raytown, Missouri, and was at
4
that time introduced to Respondent. The conduct described by Mr. Odor occurred
in Raytown, Missouri more than one year after the contract was signed.
Argument
I-V
The trial court did not err in holding that the parties’ choice of law was
relevant but not dispositive because the choice of law provision does not alone
provide a basis for personal jurisdiction.
The first point raised by HWI relates to an assertion that the trial court
misstated how a choice of law provision should be analyzed under New York law
in a case involving a non-domiciliary alleged to have transacted business in New
York. HWI’s first point should be denied.
Standard of Review
A court’s determination of personal jurisdiction is a legal conclusion.
Peoples Bank v. Frazee, 318 S.W.3d 121, 127 (Mo. 2010) (citing Bryant v. Smith
Interior Design Group, Inc., 310 S.W.3d 227, 231 (Mo. banc 2010)). The trial
court’s legal conclusions are subject to de novo review. Id.
The trial court correctly stated New York law providing that choice of law
provisions do not, by themselves, expose a party to personal jurisdiction
(Point I)
HWI accuses the trial court of error based on a parsing of the terms
“significant” and “relevant.” HWI argues that the trial court placed too little
weight on the significance of the choice of law provision. HWI is incorrect.
5
New York law provides that “[w]hile it is appropriate to give some weight
to choice of law provision . . . a choice of law clause alone is not dispositive” of
personal jurisdiction. Premier Lending Services, Inc. v. J.L.J. Associates, et al.,
924 F.Supp. 13, 17 (S.D.N.Y. 1996). A court’s consideration of personal
jurisdiction looks “to the totality of the circumstances to determine whether the
defendant has engaged in such purposeful activity.” Posven v. Liberty Mutual Ins.
Co., 303 F.Supp.2d 391, 397 (S.D.N.Y. 2004). Courts are properly skeptical of
attempts to assert personal jurisdiction over a non-domiciliary based on a single
event, or meeting. Id. at 398. Instead, the emphasis should be on “a certain
quality, rather than a specific quantity, of contacts with the forum.” Three Five
Compounds, Inc. v. Scram Technologies, Inc., 2011 U.S. Dist. LEXIS 134530
(S.D.N.Y. 2011), at *10 (quoting United States Theatre Corporation v.
Gunwyn/Lansburgh Ltd. Partnership, 825 F.Supp. 594, 596 (S.D.N.Y. 1993)).
HWI substantially ignores the law of the forum state. Instead, HWI
supplies an unfocused narrative based largely on secondary sources rather than
drilling down to the legal principles set forth by New York courts.
HWI also ignores the teachings of this Court. In the briefing below and
during oral argument at the hearing, the parties and trial court discussed this
court’s holding in Office Supply Store.com v. Kansas City School Board, 334
S.W.3d 574 (W.D. Mo. 2011) (LF 11) (Tr. 18, 28-30). In Office Supply
Store.com, this court examined whether California lacked long-arm jurisdiction
over the Kansas City School Board based on purchases made by the School Board.
6
Id. The court held that California lacked personal jurisdiction, in part because the
Kansas City School Board had no business operations in California, does not
regularly solicit business in California, and did not send its employees or agents to
California to conduct business. Id. at 578.
This court held that “[t]he fact that the School District may have made
certain payments to an address in California cannot – standing alone – support the
exercise of California’s personal jurisdiction.” Id. Although the Office Supply
Store.com case was discussed at the hearing below (Tr. 18, 28-30), was cited in
the briefing submitted to the trial court (LF 11), HWI fails to address – or even
mention – the case. HWI has been avoiding this important precedent throughout
this proceeding, and its silence about Office Supply Store.com in this appeal does
not inspire confidence in its legal analysis.
Because the trial court accurately stated the role of choice of law provisions
in determining personal jurisdiction under New York law, HWI’s first point and
request for relief should be denied.
The trial court did not err in finding that Respondent could not have
reasonably being haled into a New York court (Points II and III)
Appellant’s second and third points raise issues concerning the facts
considered and adjudicated by the trial court, including facts relating to
Respondent’s conduct and the executing and mailing of a contract.
Standard of Review
7
The trial court’s Order/Judgment regarding the evidence offered at the
hearing and testimony of witnesses by affidavit is reviewed on appeal to determine
if the judgment is supported by substantial evidence, is against the weight of the
evidence, or erroneously declares or applies the law. Murphy v. Carron, 536
S.W.2d 30, 32 (Mo. banc 1976); Bogart v. Director of Revenue, 185 S.W.3d 286,
287 (Mo.App. W.D. 2006).
The trial court correctly analyzed facts relating to Respondent’s conduct and
ruled that he did not transact business within New York (Points II and III)
For its second point, HWI relies on the following non sequitor: because it
considers Respondent to be a “nationally known and highly successful attorney,”
and a “sophisticated trial lawyer,” the trial court must have “erred in using a
subjective standard to determine a party’s expectations, when the court should
have used an objective standard.” (Appellant’s Brief, at 19 and 20). HWI is
mistaken.
First, other than its own conclusion, HWI offers no reason to believe the
trial court relied upon Respondent’s subjective intent rather than the objective
facts. HWI is strangely mute on this dispositive point. In fact, the trial court’s
Order/Judgment set forth a multi-factor test employed by New York courts for
determining when a non-domiciliary transacts business in New York. (A3-4).
The trial court then stated that, based on the record, oral argument, and “evidence
adduced and entered into the record,” that “Defendant presented the clearest and
most satisfactory evidence that Defendant did not transact any business within
8
New York under N.Y. C.P.L.R. § 302(a)(1).” (A4). The trial court followed by
setting forth specific objective facts upon which it relief in making its ruling.
(A4).
The predicate of HWI’s second point – that the trial court failed to follow
the objective evidence – is without merit.
Also, HWI’s discussion of party sophistication is irrelevant, since the trial
court relied on the objective evidence rather than divining Respondent’s subjective
intent. Although HWI refers to Respondent as “a nationally known and highly
successful attorney” and a “sophisticated trial lawyer,” there was no evidence at
the hearing that Respondent’s status as a trial lawyer has any bearing on the
narrow issue of personal jurisdiction before the court. The term “sophisticated
party” was not defined, was never addressed by the trial court, and is little more
than a rhetorical device that HWI attempts to deploy against Respondent. But
HWI provides no legal support for its desired result. HWI’s second point and
request for relief should be denied.
HWI’s third point is basically a recasting of its previous points, with
emphasis on the trial court’s reference to Sunward Electronics, Inc. v. McDonald,
362 F.3d 17, 22 (2d Cir. N.Y. 2004). HWI claims the trial court erred by relying
on the test set forth in Sunward, a case involving a franchise agreement, because
“[t]he case on appeal does not involve a franchise agreement; thus the trial court’s
reliance on Sunward, which requires an inquiry into franchisee behavior, is
misplaced.” (App. Brief at 22-23).
9
HWI is confused about Sunward.1 In the first place, the trial court relied on
Sunward only for a statement of the relevant test under New York, not for its
analysis of franchise agreements. In the second place, the relevant test under New
York law is not limited to cases involving franchise agreements, but also pertains
more generally to cases involving an attempt to assert personal jurisdiction over a
non-domiciliary.
Finally, as Sunward makes clear, exercise of personal jurisdiction over a
non-domiciliary may be appropriate when there is “a continuous and on-going
commercial relationship with Plaintiff.” Sunward, 362 F.3d at 23. By sharp
contrast to the facts in Sunward, there is absolutely no evidence that Respondent
had any commercial relationship with HWI, much less a continuous and ongoing
relationship. The facts set forth above demonstrate that Respondent had no
commercial relationship whatsoever with Appellant. Therefore, HWI’s third point
and request for relief should be denied.
The trial court did not err by shifting the burden from Respondent to
Appellant since the trial court found that Respondent met his burden by
providing the clearest and most satisfactory evidence (Point IV)
1 For example, after arguing that reliance on Sunward is misplaced because this
case does not involve a franchise agreement (App. Brief at 22-23), HWI urges
reliance on Sunward (App. Brief at 30, where HWI argues that court’s finding is
wrong because it conflicts with Sunward).
10
Appellant also asserts that the trial court improperly shifted the burden of
proof from Respondent to Appellant.
Standard of Review
A court’s determination of personal jurisdiction is a legal conclusion.
Peoples Bank v. Frazee, 318 S.W.3d 121, 127 (Mo. 2010) (citing Bryant v. Smith
Interior Design Group, Inc., 310 S.W.3d 227, 231 (Mo. banc 2010)). The trial
court’s legal conclusions are subject to de novo review. Id.
The trial court did not shift the burden of proof and HWI’s conclusion to the
contrary is incorrect (Point IV)
HWI unfairly and erroneously describes the trial court’s legal reasoning as
shifting the burden of proof from Respondent to Appellant. (App. Brief 27). HWI
even states ”[t]he burden to show the lack of personal jurisdiction by the clearest
and most convincing evidence should have been Respondents (sic).” (App. Brief
27). HWI’s statement is remarkable since the recommendation contained in the
language quoted is precisely what the trial court did: “Defendant presented the
clearest and most satisfactory evidence that Defendant did not transact any
business within New York under N.Y.C.P.L.R. § 302(a)(1).” (A4).
HWI’s fourth point illustrates an unfortunate aspect of this litigation. Since
the entry of the Order/Judgment, HWI has essentially taken a series of inchoate
potshots at the trial court, rather than fulfilling its duty to present a focused legal
analysis in support of its claims of error. In Point IV, HWI attributes a burden-
shift to the trial court for which there not only is no evidence, but which is plainly
11
contradicted by the trial court’s clear language to the contrary. HWI has used a
similar tactic before. (LF 34-42).
Point IV of HWI’s appeal does not present a cogent and candid analysis of
the trial court’s reasoning, and should be denied.
The trial court did not err by finding that Respondent’s contacts with New
York are insufficient to satisfy minimum contacts under due process
requirements (Point V)
In its final point, HWI challenges the trial court’s conclusion that
Respondent’s limited contacts with the State of New York (sending one payment
and signing a contract containing a forum selection clause) mean that Respondent
should not have reasonably anticipated being haled into court in Chautauqua
County, New York.
Standard of Review
A court’s determination of personal jurisdiction is a legal conclusion.
Peoples Bank v. Frazee, 318 S.W.3d 121, 127 (Mo. 2010) (citing Bryant v. Smith
Interior Design Group, Inc., 310 S.W.3d 227, 231 (Mo. banc 2010)). The trial
court’s legal conclusions are subject to de novo review. Id.
The trial court’s due process analysis is correct based on the
evidence in the record (Point V)
In its fifth point, HWI expresses disagreement with the trial court’s finding
that Respondent had only two contacts with the forum state: he sent one payment
12
to New York on 2007, and he signed a contract in 2007 containing a forum
selection clause.
In its brief, HWI takes sharp issue with the trial court’s finding:
Appellant and Respondent had at least 13 contacts in a variety of
media over a period of two years; and at least 9 contacts were
mutually participated in by Appellant and Respondent or Appellant
and Respondent’s Agents.
(App. Brief at 30). Appellant’s brief then itemizes the 13 alleged contacts. (App.
Brief at 30-31).
This itemization of the alleged contacts has been rejected twice as evidence
supporting assertion of personal jurisdiction. The first time was at the hearing.
The second time was following HWI’s Motion to Vacate the Order Judgment (LF
34-42, 43-38, and 49).
HWI’s itemization rests in part on affidavits, and the trial court “can believe
or disbelieve any statement in such affidavits, and factual determinations are
within the sole discretion of the circuit court.” People’s Bank, 318 S.W.3d at 128.
Further, the itemization is predicated in part on a self-serving conclusion that an
architect involved in 2007 was Respondent’s “agent.” (App. Brief at 30, nos. 1-3).
No evidence was presented to the trial court to establish agency, and the trial court
made no finding or ruling on whether others were acting as agents of Respondent.
Appellant has not preserved the issue of agency, and is not entitled to the benefits
of such a ruling when the matter was never addressed below.
13
Item nos. 4 and 5 of HWI’s itemization are insufficient to establish personal
jurisdiction under Office Supply Store.com. The contract (item no. 4) was
negotiated in Missouri, not New York. The payment (item no. 5) “cannot –
standing alone – support the [New York] court’s exercise of personal jurisdiction.”
Office Supply Store.com, 334 S.W.3d at 578 (citing M&D Enterprises, Inc. v.
Fournie, 600 S.W.2d 64 (Mo. App. S.D. 1980)).
Item nos. 6-13 all reference events in 2008 and 2009 and are therefore not
temporally related to Respondent’s relevant conduct. Appellant’s underlying
claim is that the New York courts had personal jurisdiction over Respondent at the
time of the 2007 contract. No support is offered for the counterintuitive principle
that events occurring a year or two later may retroactively confer personal
jurisdiction on a court. Further, the remote events described in item nos. 6-13 are
mostly unilateral acts by HWI. For example, the fact that an HWI employee sent
Respondent an email (item no. 9) has no logical or legal bearing on whether
Respondent purposefully availed himself of the privileges of conducting business
in the State of New York.
The trial court was correct to disregard this list of acts as substantially
irrelevant to an analysis of personal jurisdiction.
Conclusion
Wherefore, Respondent requests that this court affirm the trial court’s
Order/Judgment in all respects as to the issues brought by Appellant. Respondent
14
requests that HWI’s five points of appeal should be denied, and this court provide
whatever further relief this court deems fair and appropriate.
RESPECTFULLY SUBMITTED,
GREGORY LEYH, P.C.
/s/ Gregory Leyh Gregory Leyh, MO #42283 104 NE 72nd Street, Suite I Gladstone, MO 64118 (816) 283-3380 (816) 283-0489 (Facsimile) gleyh@leyhlaw.com COUNSEL FOR RESPONDENT
CERTIFICATE OF SERVICE
I hereby certify that on this 22nd day of October, 2012, a copy of the foregoing Respondent’s Brief was filed electronically. Notice of this filing will be sent by operation of the Court’s electronic filing system to all parties indicated in the electronic filing receipt. All other parties will be served by regular U.S. mail. Parties may also access this filing through the Court’s electronic filing system.
/s/ Gregory Leyh
Attorney for Respondent
CERTIFICATE OF COMPLIANCE
Pursuant to Supreme Court Rule 84.06(b) and Rule 55.03, the undersigned
hereby certifies the following:
1. This brief complies with the limitations contained in Rule 84.06(b)
and Missouri Court of Appeals Rule XLI;
2. This brief was prepared using Microsoft Office Word 2010.
According to the word count feature used in that program, this brief contains 3,183
words, excluding the Table of Contents and Table of Authorities.
3. This brief has been scanned for viruses on October 22, 2012 using
the program Microsoft Security Essentials, which was installed on August 2, 2012.
According to those programs, this Brief is virus-free.
/s/ Gregory Leyh Attorney for Respondent
INDEX TO APPENDIX
) )
IN THE CIRCUIT COURT OF JACKSON COUNTY, MISSOURI AT KANSAS CITY
HOPE'S WINDOWS, INC., ) ) ) ) ) ) ) ) )
AFFIDAVIT OF DEFENDANT KENNETH McCLAIN
STATE OF MISSOURI
COUNTY OFJftCt~SQJ : s.s.
1. I have n{wer purchased any products or services from Hope's Window, Inc., 84 Hopkins Avenue, P.O. Box 580, Jamestown, New York.
2. As part of a construction project at a property that I own, in 2009 my architect arranged for the purchase of various door products from Hope's Window.
3. The products were subsequently purchased from Hope's Window by Ed's Renovation, a firm that I retained to perform renovation work.
4. At no time prior to the purchase of the products and services by Ed's Renovation, did I ever speak to any person employed by or representing Hope's Window.
5. At no time prior to the purchase of the products and services by Ed's Renovation, did I ever communicate by letter or email to any person employed by or representing Hope's Window.
6. I have never personally bought any products or services, or had any business or personal dealings whatsoever, with Hope's Window.
EXHIBIT ~ 1 ~ __j__
•·
)
7. I was not personally involved in the purchase of any products or services from Hope's Window. Ed's Renovation and my architect were the parties involved in the decision to purchase door products from Hope's Window.
8. I am not an owner, member, officer or employee of Ed's Renovation, and have no financial or other interest m Ed's Renovation.
9. I have never personally visited Hope's Window in Jamestown, New York.
10. I have never transacted business in the county of Chautauqua, New York.
SWORN TO AND SUBSCRIBED before me this 20th day of July, 2011.
My Commission Expires:
AlANA 'L. ADMIRE Notiiy Public· Notary Seal Commission II 08409831
. STATE OF MISSOURI
~)i~ . \ Notary Public
... .~