Hunsaker v. American Healthcare Capital ( 2014 )

2014 UT App 275_________________________________________________________
THE UTAH COURT OF APPEALS
EMILY HUNSAKER,
Plaintiff and Appellant,
v.
AMERICAN HEALTHCARE CAPITAL,
Defendant and Appellee.
Opinion
No. 20130474-CA
Filed November 20, 2014
Fourth District Court, Spanish Fork Department
The Honorable Donald J. Eyre Jr.
No. 120300211
R. Brett Evanson and Bradley J. Weber, Attorneys
for Appellant
Greggory J. Savage, Michael D. Mayfield, and Beth
J. Ranschau, Attorneys for Appellee
JUDGE J. FREDERIC VOROS JR. authored this Opinion, in which
JUDGES MICHELE M. CHRISTIANSEN and JOHN A. PEARCE
concurred.
VOROS, Judge:
¶1 This appeal considers whether an out-of-state company
subjected itself to personal jurisdiction in Utah by advertising
that it was available to serve Utah clients, contracting with a
Utah resident to determine the value of her Utah company,
researching the value of that company using Utah-specific data,
receiving payment from a Utah client, and directing the finished
appraisal to a Utah recipient. We conclude that these contacts are
sufficient to support personal jurisdiction in Utah. We
Hunsaker v. American Healthcare Capital
accordingly reverse the district court and remand for further
proceedings.
BACKGROUND
¶2 Appellant Emily Hunsaker resides in Provo, Utah. She
sued American HealthCare Capital, a California business owned
and operated by Jack Eskenazi.
¶3 On its website, American HealthCare describes itself as
‚The Largest & Most Successful Seller of HealthCare
Companies—Serving All 50 States Since 1990.‛ The website
contains a dropdown menu with a list of states, including Utah,
in which it offers its services. After discovering the website
through an internet search, Hunsaker contacted American
HealthCare. She sought an appraiser to perform a valuation of
Sunrise Home Health and Hospice, a business she partly owned.
¶4 The parties discussed the details of the valuation over the
phone. American HealthCare notified Hunsaker’s counsel that it
would not begin work until it received payment. Hunsaker
mailed a check for the required amount. The address on the
check indicated that Hunsaker resided in Utah.
¶5 Throughout the course of the valuation process, the
parties exchanged twenty-four emails. The emails sent by
Hunsaker’s counsel indicated that his office was located in Utah.
Hunsaker’s counsel also mailed American HealthCare a package
of information about Sunrise. The parties communicated by
telephone and email and exchanged packages by mail. The
resulting valuation included geographic information about
Sunrise and information specific to the Utah healthcare market.
The valuation also included a financial analysis of Sunrise.
American HealthCare sent the draft and final valuation reports
20130474-CA 2 2014 UT App 275Hunsaker v. American Healthcare Capital
to Hunsaker in Utah.1 American HealthCare valued Sunrise at
$550,000.
¶6 Neither Eskenazi nor any of his employees visited Utah.
They completed all work on the valuation in California, where
Eskenazi lives. Indeed, American HealthCare has no Utah
presence—no office, no real property, no bank account, and no
phone number. It pays no Utah taxes.
¶7 After receiving the valuation report, Hunsaker concluded
that American HealthCare had undervalued Sunrise, resulting in
a loss to her, she alleges, of no less than $400,000. She sued,
alleging breach of contract, negligence, and other theories.
American HealthCare moved to dismiss. After a motion hearing
based on the submissions of the parties, the district court
dismissed the complaint for lack of personal jurisdiction.
ISSUE ON APPEAL
¶8 Hunsaker contends on appeal that the district court erred
in dismissing her complaint for lack of personal jurisdiction over
American HealthCare.
ANALYSIS
¶9 ‚When determining whether the trial court correctly
granted a motion to dismiss, we accept the factual allegations in
the complaint as true and consider them, and all reasonable
inferences to be drawn from them, in the light most favorable to
the nonmoving party.‛ Fenn v. Mleads Enters., Inc., 2006 UT 8,
¶ 2, 137 P.3d 706 (citation and internal quotation marks omitted).
Further, ‚*a+n appeal from a pretrial jurisdictional decision made
only on documentary evidence presents legal questions which
1. The record is not clear whether American HealthCare mailed
or emailed its final valuation report to Hunsaker. But the
difference does not affect our analysis.
20130474-CA 3 2014 UT App 275Hunsaker v. American Healthcare Capital
we review for correctness.‛ Id. ¶ 7. Finally, if the trial court
proceeds on documentary evidence alone to determine whether
personal jurisdiction is proper, ‚the plaintiff is only required to
make a prima facie showing of personal jurisdiction.‛ Neways,
Inc. v. McCausland, 950 P.2d 420, 422 (Utah 1997) (citation,
internal quotation marks, and emphasis omitted).
¶ 10 ‚The authority of the state to hale a nonresident into a
state court hinges on the ability to establish personal
jurisdiction.‛ Pohl, Inc. of Am. v. Webelhuth, 2008 UT 89, ¶ 9, 201
P.3d 944. Personal jurisdiction includes two categories: general
jurisdiction and specific jurisdiction. ‚General personal
jurisdiction permits a court to exercise power over a defendant
without regard to the subject of the claim asserted. For such
jurisdiction to exist, the defendant must be conducting
substantial and continuous local activity in the forum state.‛
Arguello v. Industrial Woodworking Mach. Co., 838 P.2d 1120, 1122
(Utah 1992). Specific personal jurisdiction ‚gives a court power
over a defendant only with respect to claims arising out of the
particular activities of the defendant in the forum state.‛ Id.¶ 11 Hunsaker relies on specific jurisdiction here. Our inquiry
into specific jurisdiction considers three elements:
[P]ersonal jurisdiction is only proper if we
determine that (1) the Utah long-arm statute
extends to defendant’s acts or contacts, (2)
plaintiff’s claim arises out of those acts or contacts,
and (3) the exercise of jurisdiction satisfies the
defendant’s right to due process under the United
States Constitution.
Fenn, 2006 UT 8, ¶ 8; see also In re W.A., 2002 UT 127, ¶ 14, 63
P.3d 607 (noting that the first consideration in assessing personal
jurisdiction is whether Utah law confers personal jurisdiction
over the nonresident defendant under ‚any Utah statute
affording it personal jurisdiction, not just Utah’s long-arm
statute‛).
20130474-CA 4 2014 UT App 275Hunsaker v. American Healthcare Capital
I. Utah’s Long-Arm Statute
¶ 12 Utah’s long-arm statute resides in Utah Code sections
78B-3-201 through 209. Section 78B-3-205 provides that a person
is subject to Utah jurisdiction if the person does any one of
several enumerated acts. Utah Code Ann. § 78B-3-205
(LexisNexis 2012). Here, the district court concluded that
Hunsaker’s allegations satisfied this section. On appeal,
Hunsaker defends that conclusion. And although American
HealthCare now argues that Hunsaker ‚failed to demonstrate
with adequate evidence the assertion [of] jurisdiction over
[American HealthCare] under any one of the three subsections of
Utah’s long-arm statute,‛ it did not contest the long-arm statute
before the district court but went straight to the due process
analysis.
¶ 13 That approach makes sense. Section 78B-3-201 of the Utah
Code provides that the long-arm statute ‚should be applied so
as to assert jurisdiction over nonresident defendants to the
fullest extent permitted by the due process clause of the
Fourteenth Amendment to the United States Constitution.‛ Id.
§ 78B-3-201(3). Given the statute’s breadth, ‚we often assume the
application of the statute—and go straight to the due process
issue.‛ Pohl, 2008 UT 89, ¶ 19 (citation and internal quotation
marks omitted).
¶ 14 We follow that approach here and proceed to the due
process issue.2
2. Concluding that a defendant’s contacts with the jurisdiction
meet the requirements of the long-arm statute also satisfies the
second element of Fenn’s three-part test—that the plaintiff’s
claim arises out of a defendant’s acts or contacts with the state.
See Fenn v. Mleads, Inc., 2006 UT 8, ¶ 8, 137 P.3d 706. This result
follows from the fact that section 78B-3-205 states that a
defendant ‚is subject to the jurisdiction of the courts of this state
as to any claim arising out of or related to‛ the enumerated acts,
including (1) ‚the transaction of any business within this state‛;
(2) ‚contracting to supply services or goods in this state‛; or (3)
20130474-CA 5 2014 UT App 275Hunsaker v. American Healthcare Capital
II. Minimum Contacts
¶ 15 Federal due process requires that, ‚in order to subject a
defendant to a judgment in personam, if he be not present within
the territory of the forum, he have certain minimum contacts
with it such that the maintenance of the suit does not offend the
‘traditional notions of fair play and substantial justice.’‛ Fenn v.
Mleads Enters., Inc., 2006 UT 8, ¶ 10, 137 P.3d 706 (quoting
International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). In
assessing minimum contacts, the court should focus its analysis
on ‚‘the relationship among the defendant, the forum, and the
litigation.’‛ Pohl, Inc. of Am. v. Webelhuth, 2008 UT 89, ¶ 24, 201
P.3d 944 (quoting Calder v. Jones, 465 U.S. 783, 788 (1984)).
¶ 16 To establish minimum contacts, ‚a defendant may
purposefully avail itself of the benefits of conducting business in
Utah.‛ Fenn, 2006 UT 8, ¶ 13. ‚Courts often determine
purposeful availment by considering whether the defendant
deliberately created some relationship with the forum state that
would serve to make that state’s potential exercise of jurisdiction
foreseeable.‛ Id. (citation and internal quotation marks omitted).
That is, ‚the defendant’s conduct and connection with the forum
State are such that he should reasonably anticipate being haled
into court there.‛ World-Wide Volkswagen Corp. v. Woodson, 444
U.S. 286, 297 (1980).3
‚the causing of any injury within this state whether tortious or
by breach of warranty.‛ Utah Code Ann. § 78B-3-205 (LexisNexis
2012).
3. ‚Admittedly, there is potentially a circular quality to World-
Wide Volkswagen’s idea that jurisdiction must be ‘foreseeable’ in
the sense that defendants ‘should reasonably anticipate being
haled into court’ in the forum state. It is, after all, the
jurisdictional principles themselves that would make jurisdiction
foreseeable.‛ Adam N. Steinman, The Meaning of McIntyre, 18
Sw. J. Int’l L. 417, 436–37 (2012) (footnotes omitted). Otherwise
stated, ‚a potential defendant can only have such an expectation
because the law so provides.‛ Martin H. Redish, Due Process,
20130474-CA 6 2014 UT App 275Hunsaker v. American Healthcare Capital
¶ 17 ‚Generally, a party purposefully avails itself of the
benefits of conducting business in a state by deliberately
engaging in significant activities within the state or by creating
‘continuing obligations between himself and residents of the
forum.’‛ Fenn, 2006 UT 8, ¶ 13 (quoting Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 476 (1985)). Purposeful availment does
not require physical presence in the jurisdiction:
[I]t is an inescapable fact of modern commercial life
that a substantial amount of business is transacted
solely by mail and wire communications across
state lines, thus obviating the need for physical
presence within a State in which business is
conducted. So long as a commercial actor’s efforts
are ‚purposefully directed‛ toward residents of
another State, we have consistently rejected the
notion that an absence of physical contacts can
defeat personal jurisdiction there.
SII MegaDiamond, Inc. v. American Superabrasives Corp., 969 P.2d
430, 434–35 (Utah 1998) (quoting Burger King Corp., 471 U.S. at
476).
¶ 18 A party purposefully avails itself of the benefits of
conducting business in a state when it has ‚(1) committed an
intentional act; (2) expressly aimed at the forum state; (3) causing
harm, the brunt of which is suffered—and which the defendant
knows is likely to be suffered—in the forum state.‛ Pohl, 2008 UT
89, ¶ 27. Further, ‚the place of injury is an important component
of the minimum contacts analysis.‛ Id. ¶ 25.
¶ 19 American HealthCare’s actions satisfy all three elements
of the purposeful-availment test. First, American HealthCare
‚committed an intentional act‛ by performing the valuation,
exchanging phone calls and emails with Utah clients, soliciting
payment from Utah clients, and sending its final report to a Utah
Federalism, and Personal Jurisdiction: A Theoretical Evaluation, 75
Nw. U. L. Rev. 1112, 1134 (1981).
20130474-CA 7 2014 UT App 275Hunsaker v. American Healthcare Capital
resident. See id. ¶ 27. Hunsaker requested the valuation of her
company for the purpose of selling it in Utah. American
HealthCare then accepted her payment, completed the valuation
in California, and sent it to Utah.
¶ 20 Second, American HealthCare’s actions were ‚expressly
aimed‛ at Utah. See id. American HealthCare held itself out as a
company that performed valuations in Utah. It accepted
payment originating in Utah to complete an appraisal of a
business located in Utah. The completed valuation, sent to
Hunsaker in Utah, contains information about the subject
business as well as Utah-specific market data. Hunsaker alleged
actions ‚expressly aimed at the forum state,‛ which satisfies the
second element of the purposeful-availment test. See id.
¶ 21 Third, accepting the factual allegations in the complaint as
true, see Fenn v. Mleads Enters., Inc., 2006 UT 8, ¶ 2, 137 P.3d 706,
we must conclude that American HealthCare’s actions caused
harm, the brunt of which was suffered—and which American
HealthCare knew was likely to be suffered—in Utah. The
complaint alleges that American HealthCare’s failure to perform
its valuation in keeping with industry standards resulted in
monetary loss in Utah. American HealthCare knew Hunsaker’s
business was located in Utah. The valuation contained
information about the healthcare market in Salt Lake County,
Utah County, and Juab County, Utah. The valuation was
directed to Hunsaker at her Provo, Utah, address. Given
American HealthCare’s knowledge that Hunsaker’s business
was located in Utah, it knew that the effects of a failure to
perform the valuation properly would be felt in Utah.
¶ 22 ‚The fact that the contact with Utah occurred via the
Internet does not change the analysis.‛ Id. ¶ 12. ‚*C+ourts
determining personal jurisdiction primarily on the basis of
Internet activity generally focus on the nature and quality of
activity that a defendant conducts over the Internet.‛ See id. ¶ 15
(citation and internal quotation marks omitted).
20130474-CA 8 2014 UT App 275Hunsaker v. American Healthcare Capital
¶ 23 The email contact between Hunsaker and American
HealthCare established a business relationship. Through email
contact, American HealthCare requested payment and
scheduled conference calls. American HealthCare delivered the
draft and final valuation reports. In so doing, it purposefully
availed itself of the benefits of conducting business in this state
‚by deliberately engaging in significant activities within the
state‛ and ‚by creating continuing obligations between *itself+
and residents of the forum.‛ Id. ¶ 13 (citation and internal
quotation marks omitted). ‚The essential question is whether the
defendant purposefully and voluntarily direct[ed] [its] activities
toward the forum so that [it] should expect . . . to be subject to
the court’s jurisdiction based on *its+ contacts with the forum.‛
Pohl, Inc. of Am. v. Webelhuth, 2008 UT 89, ¶ 24, 201 P.3d 944(alteration and omission in original) (citation and internal
quotation marks omitted). American HealthCare did that here.
¶ 24 We reached the same conclusion on analogous facts in
Fort Pierce Business Park, LC v. Closing Resources, LLC, 2009 UT
App 357U. There we found that personal jurisdiction existed
over an out-of-state defendant serving as an escrow agent for the
sale of real property in Utah. Id. para. 9. The seller was a Utah
resident, and the closing was to occur in Utah. Id. para. 4. The
defendant sent two physical letters and two emails to the
plaintiff. Id. para. 6. We held that because the defendant
‚communicated directly with parties in Utah for the purpose of
completing a particular business transaction, as opposed to
simply sending out mass emails for the purpose of soliciting
business,‛ the defendant company was subject to specific
personal jurisdiction in Utah. Id. para. 7. Further, ‚[t]he business
transaction itself involved property located in and owned by the
State of Utah, subject to sale and purchase by Utah entities.‛ Id.para. 9.
¶ 25 Lee v. Frank’s Garage & Used Cars, Inc., 2004 UT App 260,
97 P.3d 717, similarly supports our conclusion. There, an out-of-
state dealer advertised an antique car for sale. Id. ¶ 3. After a
Utah buyer expressed interest, the seller negotiated a sale. Id.
After receiving payment, the dealer shipped the car to Utah.
20130474-CA 9 2014 UT App 275Hunsaker v. American Healthcare Capital
Id. ¶ 4. We had ‚little difficulty‛ in concluding that the dealer’s
conduct and connection with Utah were such that it should
reasonably have anticipated being haled into court here in the
event of a dispute arising from the sale of the car. Id. ¶ 14.
¶ 26 American HealthCare seeks to distinguish Lee on the
ground that the car dealer there shipped goods to a Utah
resident, whereas American HealthCare performed its service
entirely within California. But the record demonstrates that
American HealthCare directed its valuation report to a Utah
resident. The constitutional analysis does not turn on whether a
product crosses the state line strapped to a transport truck or
attached to an email. ‚Traditional notions of fair play‛ must be
assessed in light of how people transact business here and now.4
¶ 27 Because the motion to dismiss was made on documentary
evidence alone, ‚*Hunsaker+ is only required to make a prima
facie showing of personal jurisdiction.‛ See Neways, Inc. v.
McCausland, 950 P.2d 420, 422 (Utah 1997) (citation, internal
quotation marks, and emphasis omitted). Hunsaker met the
prima facie threshold requirement here, demonstrating that
American HealthCare established a ‚substantial connection with
[Utah] such that the defendant should reasonably anticipate
being haled into court *here+.‛ See Pohl, 2008 UT 89, ¶ 23 (citation
and internal quotation marks omitted). We are satisfied that ‚the
exercise of jurisdiction satisfies the defendant’s right to due
process under the United States Constitution.‛ See Fenn v. Mleads
Enters., Inc., 2006 UT 8, ¶ 8, 137 P.3d 706.
4. Walden v. Fiore, 134 S. Ct. 1115 (2014), on which American
HealthCare relies, does not alter this result. That case held that a
Georgia resident did not purposefully avail himself of
conducting business in the state of Nevada by committing a tort
in Georgia against a Nevada resident traveling in Georgia and
by receiving unilateral communications from that Nevadan and
his Nevada counsel. Id. at 1126.
20130474-CA 10 2014 UT App 275Hunsaker v. American Healthcare Capital
CONCLUSION
¶ 28 The order of the district court is reversed and the case
remanded for proceedings consistent with this opinion.
20130474-CA 11 2014 UT App 275