Shamrock Building Materials, Inc. v. Overseas Building Supply, L.L.C.

76 P.3d 127, 189 Or. App. 302, 2003 Ore. App. LEXIS 1154
CourtCourt of Appeals of Oregon
DecidedAugust 20, 2003
Docket0110-11075; A117553
StatusPublished

This text of 76 P.3d 127 (Shamrock Building Materials, Inc. v. Overseas Building Supply, L.L.C.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shamrock Building Materials, Inc. v. Overseas Building Supply, L.L.C., 76 P.3d 127, 189 Or. App. 302, 2003 Ore. App. LEXIS 1154 (Or. Ct. App. 2003).

Opinion

KISTLER, J., pro tempore

Plaintiff Shamrock Building Materials, Inc., is an Oregon corporation with its principal place of business in Beaverton, Oregon. Defendant Overseas Building Supply, L.L.C. (Overseas), is a Florida limited liability corporation with its principal place of business in Winter Park, Florida. In 2001, Shamrock accepted an offer from Overseas to purchase 99,600 sheets of drywall over a period of 70 days. When the drywall allegedly proved defective, Shamrock filed a complaint against Overseas in Oregon. Overseas moved to dismiss Shamrock’s complaint for lack of personal jurisdiction. The trial court granted the motion. On Shamrock’s appeal, we reverse and remand.

For the purposes of this appeal, the relevant facts are not disputed. Overseas imports and sells drywall wholesale. Shamrock is a wholesale broker of building supplies. In 2000, Overseas telephoned Shamrock in Oregon. Overseas asked Shamrock if it could supply Overseas with drywall manufactured in the United States. Shamrock replied that it would be glad to do business with Overseas but that the domestic supply of drywall was very tight at that point. No agreement resulted from Overseas’ initial contact.

In July 2001, Overseas contacted Shamrock in Oregon again. This time, Overseas faxed an offer to sell Shamrock 99,600 sheets of imported drywall for $76 per thousand square feet, F.O.B. Overseas’ warehouse in Florida. The offer contemplated that Shamrock would purchase the drywall over a period of 70 days. Specifically, it required Shamrock to issue a purchase order for five truckloads of drywall at $81 per thousand square feet pending a rebate of $5 per thousand square feet if Shamrock prepaid $91,200 for the last 25,000 of the 99,600 sheets ordered. The offer also contemplated that Shamrock would issue purchase orders for the remainder of the drywall during the 70-day period and that Overseas would bill Shamrock periodically as it issued the purchase orders. If Shamrock did not issue purchase orders for all the drywall within the 70-day period, the offer required Shamrock to pay demurrage to Overseas based on [305]*305the amount of drywall remaining. Demurrage would be calculated every 10 days, and Overseas would bill Shamrock accordingly. Additionally, after the 70-day period passed, the price for the remaining sheets of drywall was subject to renegotiation.

Shamrock accepted Overseas’ offer. According to the affidavit of Overseas’ president, within the 70-day period,

“Shamrock purchased and picked up 79,260 sheets of drywall (prior to the penalty portion of the Agreement) F.O.B. at the Overseas’ warehouse in Brevard County, Florida. Shamrock itself, or through arrangements Shamrock made with others, then caused delivery of the drywall to various locations from the F.O.B. sale at Overseas’ dock in Brevard County, Florida. On information and belief, the vast majority of the drywall which Shamrock purchased F.O.B. at Overseas’ warehouse was delivered by Shamrock to locations in Florida, except for certain drywall delivered by, or at the direction of, Shamrock to a location in Georgia.”1

As Shamrock issued purchase orders for the drywall, “[invoices were faxed daily to [Shamrock in] Oregon for processing and payment.”

The drywall that Overseas sold Shamrock allegedly proved defective. When Shamrock’s customers began complaining about the drywall, Shamrock took back the drywall from the customers who rejected it and resold the drywall in an effort to mitigate its damages. It also filed a complaint for breach of contract against Overseas in Multnomah County Circuit Court. Overseas moved to dismiss the complaint for lack of personal jurisdiction. The trial court granted Overseas’ motion and entered judgment against Shamrock, which has appealed from the judgment.2

On appeal, Shamrock argues that the trial court had jurisdiction over Overseas under ORCP 4 D, 4 E, and 4 L, the last of which authorizes a trial court to exercise personal [306]*306jurisdiction over an out-of-state defendant to the extent permitted by the Due Process Clause. See Sutherland v. Brennan, 321 Or 520, 528-29, 901 P2d 240 (1995) (interpreting ORCP 4 L). Overseas responds that the trial court lacked jurisdiction under ORCP 4 D and 4 E but that, even if the terms of those rules were satisfied, the Due Process Clause was not. The issue, as the parties frame it on appeal, reduces to the question whether an Oregon court may, consistently with the Due Process Clause, exercise personal jurisdiction over Overseas.

The United States Supreme Court has long recognized that due process limits the power of a state court to exercise personal jurisdiction over an out-of-state defendant. See Pennoyer v. Neff, 95 US 714, 733-34, 24 L Ed 565 (1877). The basis for that conclusion has shifted from territorial limitations on process to limitations based on fairness and convenience to the parties involved. International Shoe Co. v. Washington, 326 US 310, 316, 66 S Ct 154, 90 L Ed 95 (1945) (explaining the shift from the rationale in Pennoyer). As the Court explained in International Shoe,

“now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only 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 ‘traditional notions of fair play and substantial justice.’ ”

326 US at 316. The “criteria by which [a court] mark[s] the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical and quantitative.” Id. at 319. Rather, “[w]hether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to ensure.” Id.

Since International Shoe, the courts have sought to define more precisely the principle that the Court articulated in that case. As refined in later cases, the inquiry divides into two parts:

[307]*307“First, the defendant must have ‘minimum contacts’ with the forum state. ‘Minimum contacts’ will be found where the defendant has ‘purposefully directed’ its activities at residents of the forum state and where the litigation ‘arises out of or relates to’ those activities. Second, even if minimum contacts exist, the exercise of jurisdiction must be reasonable; in the light of various factors deemed relevant by the Court, the exercise of jurisdiction must comport with ‘fair play and substantial justice.’ ”

State ex rel Circus Circus Reno, Inc. v. Pope, 317 Or 151, 159-60, 854 P2d 461 (1993) (emphasis in original).

The first part of the inquiry—whether a defendant purposefully has directed or availed itself of the privileges of conducting activities within the forum state—“ensures that a defendant will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts.” Burger King Corp. v. Rudzewicz, 471 US 462, 475, 105 S Ct 2174, 85 L Ed 2d 528 (1985). The Court accordingly explained in Burger King:

“[A]n individual’s contract with an out-of-state party alone

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Related

Pennoyer v. Neff
95 U.S. 714 (Supreme Court, 1878)
International Shoe Co. v. Washington
326 U.S. 310 (Supreme Court, 1945)
World-Wide Volkswagen Corp. v. Woodson
444 U.S. 286 (Supreme Court, 1980)
Burger King Corp. v. Rudzewicz
471 U.S. 462 (Supreme Court, 1985)
Sutherland v. Brennan
901 P.2d 240 (Oregon Supreme Court, 1995)
State Ex Rel. Circus Circus Reno, Inc. v. Pope
854 P.2d 461 (Oregon Supreme Court, 1993)
Kotera v. Daioh International U.S.A. Corp.
40 P.3d 506 (Court of Appeals of Oregon, 2002)

Cite This Page — Counsel Stack

Bluebook (online)
76 P.3d 127, 189 Or. App. 302, 2003 Ore. App. LEXIS 1154, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shamrock-building-materials-inc-v-overseas-building-supply-llc-orctapp-2003.