Hydrokinetics, Inc. v. Alaska Mechanical, Inc.

700 F.2d 1026, 1983 U.S. App. LEXIS 29503
Court of Appeals for the Fifth Circuit·Decided March 21, 1983·No. 82-1123·Published·Cited by 142 cases

Opinions

WISDOM, Circuit Judge:

The question we are asked to decide in this case is whether the exercise of jurisdiction over the person of the defendant under Texas law comports with the basic due process requirements of the United States Constitution. We conclude that it does not, and affirm.

[1027] I.

The appellant in this contract dispute, Hydrokinetics, Inc. is a manufacturing concern organized and existing under the laws of the state of Texas. The appellee, Alaska Mechanical, Inc., is an Alaska corporation engaged in the business of construction contracting. It specializes in the mechanical area, and works exclusively on projects within the state of Alaska. Alaska Mechanical is not licensed to do business in Texas, and has no offices, agents, or employees there.

Alaska Mechanical bid on, and was later awarded, a mechanical subcontract for the United States Navy at Adak, Alaska, which called for it to furnish and install certain waste heat recovery silencer units. Alaska Winter, a manufacturer’s representative in Alaska soliciting orders for Hydrokinetics’s products, communicated to Alaska Mechanical that Hydrokinetics was interested in supplying these units. Alaska Winter initially brokered all communications between the parties, but the actual contract negotiations were conducted directly between Alaska Mechanical, in Alaska, and Hydrokinetics, in Texas, by telex, telephone and letter. While negotiations were underway, two officers of Alaska Mechanical visited Hydrokinetics’s plant to inspect the equipment and facilities.1 The parties later entered into a final agreement which provided that Hydrokinetics would manufacture and deliver to Alaska Mechanical five waste heat recover silencer units. This agreement took the form of an Alaska Mechanical purchase order, with attached provisions, executed by both parties. The contract stipulated that it was to be governed and construed according to the laws of the state of Alaska.

The waste heat recovery silencer units manufactured by Hydrokinetics were shipped to Seattle, Washington, and later transported to the United States Navy facility at Adak, Alaska. Alaska Mechanical notified Hydrokinetics that in its opinion the goods were unsuitable, and that it was rejecting them. Hydrokinetics sued Alaska Mechanical in federal district court in Texas for breach of contract. Subject matter jurisdiction was based on diversity of citizenship. Hydrokinetics contended that the goods were suitable and had been accepted by Alaska Mechanical.

The district court found that while Hydrokinetics did make a prima facie showing on the facts of jurisdiction,2

when this Court’s attention turned to the constitutional considerations of fair play and substantial justice, International Shoe Co. v. Washington, 326 U.S. 310 [66 S.Ct. 154, 90 L.Ed. 95] (1945), it is determined it would not be fair and reasonable to require Alaska Mechanical, Inc., as Defendant, to come into Texas and defend this action considering the lack of purposeful activity by the Defendant to avail itself of the privilege of conducting activities within Texas, and to invoke the benefits and protections of its laws. See Alchemie Intern, Inc. v. Metal World, Inc., 523 F.Supp. 1029 [1039] (D.N.J.1981); Communication Equip v. Municipality of Anchorage, 498 F.Supp. 632 (M.D.Ala.N. D.1980).

Concluding that “the Defendant never made any calculated effort to engage in or solicit business in Texas with a Texas company nor had any expectation of extracting [1028] profits”3 the court granted Alaska Mechanical’s motion to dismiss. Our review is limited to the propriety of the district court’s finding that it lacked jurisdiction over the person of the defendant.

II.

In Product Promotions, Inc. v. Cousteau, 5 Cir.1974, 495 F.2d 483, 489, this Court held that “[t]he power of a federal court entertaining a suit based on diversity of citizenship to exercise jurisdiction over the persons of non-resident defendants turns on two independent considerations. The law of the state in which the federal court sits must confer jurisdiction over the persons of the defendant, and if it does, the exercise of jurisdiction under state law must comport with basic due process requirements of the United States Constitution”. This appeal involves only the latter consideration.4 In determining whether constitutional due process requirements have been met when a state exercises jurisdiction over the person of a nonresident defendant, v.e apply a two-pronged test. The “[djefendant must have some minimum contacts with the state resulting from an affirmative act or acts on its part, and it must not be unfair or unreasonable to require the nonresident defendant to defend the suit in the forum.” Southwest Offset, Inc. v. Hudco Publishing Co., Inc., 5 Cir. 1980, 622 F.2d 149,152 (citing Product Promotions, 495 F.2d at 494).

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Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d 1026, 1983 U.S. App. LEXIS 29503 (5th Cir. 1983).

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