Opinion
No. CV 05 04002666
November 22, 2005
MEMORANDUM OF DECISION RE MOTION TO DISMISS
On April 22, 2005, the plaintiffs, Centennial Helicopters, Inc. (Centennial) and XL Specialty Ins. Co. (Specialty), filed a six-count complaint against the defendant. The complaint alleges that Centennial, a Connecticut corporation with its principal place of business in Connecticut, owned and operated a helicopter upon which the defendant, a Pennsylvania corporation with its principal place of business in Pennsylvania, performed an annual inspection, including maintenance and repairs. Following the defendant's inspection and maintenance in January of 2003, the helicopter experienced a loss of engine power that resulted in a forced landing, causing damage to the helicopter and the private property upon which it landed.
Pursuant to an insurance policy it issued to Centennial, Specialty made payments to both Centennial and the owner of the private property. Counts one through three of the complaint assert that Specialty is subrogated to the rights of its insured to the extent of the payments it made, and that the defendant is liable to Specialty as a result of its negligence, failure to comply with federal regulations, and breach of contract, respectively. Counts four through six allege that the defendant is liable to Centennial for the un-reimbursed portion of the damages to its helicopter, also based on claims of negligence, failure to comply with federal regulations, and breach of contract, respectively.
The defendant has now moved to dismiss the action, pursuant to Practice Book § 10-31(a)(2), for lack of personal jurisdiction. It argues that neither Connecticut's long-arm statute nor the minimum contacts required under the due process clause of the fourteenth amendment to the constitution have been satisfied.
The complaint and the documents accompanying the motion to dismiss and the objection to it reveal several undisputed facts relevant to personal jurisdiction. The defendant has no offices, employees, sales representatives, or sales territories in Connecticut. It owns no interest in real property, holds no bank accounts, and has no warehouses, equipment or telephone numbers in Connecticut. From 1995 to 2003, the defendant had performed most of the annual inspections, as well as some additional maintenance, on the helicopter that is the subject of this lawsuit. The defendant routinely sent statements and bills to Centennial at its offices in Connecticut, and Centennial mailed payments to the defendant's Pennsylvania facility. Four to six weeks prior to the performance of the inspection that is at the heart of this lawsuit, Centennial contacted the defendant via telephone to request that it perform an annual inspection. Centennial and the defendant agreed over the telephone on the details of the inspection. Centennial flew the aircraft to the defendant's facility in Pennsylvania, where the inspection was performed, and Centennial picked up the aircraft from the defendant when the inspection was completed.
Centennial and the defendant had no written contract. The defendant steadily advertised its services over the past twelve years in two publications, Air Beat magazine (the official publication of the Airborne Law Enforcement Association, of which Centennial was a member) and Universal Helicopter, both of which are distributed worldwide. The defendant also advertised on the internet. Other than its dealings with Centennial, however, the defendant has had no contact with Connecticut or Connecticut residents during the past four years.
"A motion to dismiss admits all facts well pleaded and invokes any record that accompanies the motion, including supporting affidavits that contain undisputed facts." (Internal quotation marks omitted.) Rivera v. Meriden, 72 Conn.App. 766, 769, 806 A.2d 585 (2002). Practice Book § 10-31(a)(2) provides that the "motion to dismiss shall be used to assert . . . lack of jurisdiction over the person . . ." Generally, "[i]f a challenge to the court's personal jurisdiction is raised by a defendant, either by a foreign corporation or by a nonresident individual, the plaintiff must bear the burden of proving the court's jurisdiction." Knipple v. Viking Communications, Ltd., 236 Conn. 602, 607, 674 A.2d 426 (1996).
"When a defendant files a motion to dismiss challenging the court's jurisdiction, a two part inquiry is required. The trial court must first decide whether the applicable state long-arm statute authorizes the assertion of jurisdiction over the [defendant]. If the statutory requirements [are] met, its second obligation [is] then to decide whether the exercise of jurisdiction over the [defendant] would violate constitutional principles of due process." (Internal quotation marks omitted.) Id., 606.
General Statutes § 33-929(f), provides, in relevant part: "Every foreign corporation shall be subject to suit in this state, by a resident of this state or by a person having a usual place of business in this state, whether or not such foreign corporation is transacting or has transacted business in this state and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising as follows: (1) Out of any contract made in this state or to be performed in this state; (2) out of any business solicited in this state by mail or otherwise if the corporation has repeatedly so solicited business, whether the orders or offers relating thereto were accepted within or without the state . . ."
The first issue is whether the plaintiffs' causes of action arose out of any contract "made in this state" under § 33-29(f)(1). The defendant argues that the contract from which the cause of action arose was made in Pennsylvania because the last act necessary to create an effective agreement, an oral promise, occurred in Pennsylvania. The plaintiffs counter that, because the agreement was entered into over the telephone, it was made by both parties at their respective facilities in Connecticut and New York.
"[I]t is well established that a contract is considered made when and where the last thing is done which is necessary to create an effective agreement. Alfred M. Best Co., Inc. v. Goldstein, 124 Conn. 597, 602, 1 A.2d 140 (1938), and cases cited therein." (Internal quotation marks omitted.) Mitchell v. Patterson, Superior Court, judicial district of New Haven, Docket No. CV 04-4001501 (June 21, 2005, Levin, J) ( 39 Conn. L. Rptr. 560). It follows that an oral contract entered into over the telephone is considered made in the state where a party accepts an offer. See Pomazi v. Health Industries of America, 869 F.Sup. 102, 105 (D.Conn. 1994) (applying General Statutes § 33-411(c), the predecessor statute to § 33-929(f), and stating that a "contract entered into over the telephone is created in the state in which the party accepts").
The defendant has submitted an affidavit of Philip Bidden, its general manager, stating that Centennial "contacted [the defendant] via telephone to perform an annual inspection" and that the defendant and Centennial "agreed over the phone on the details of the inspection." Although this evidence might not be conclusive in the presence of contradictory evidence, the plaintiffs have not pleaded any facts or submitted any evidence that either refute the Bidden affidavit or shed any more light on where the acceptance occurred. In the absence of contradictory evidence, these facts suggest that it was the defendant, located in Pennsylvania, that accepted Centennial's offer because it was Centennial that initiated contact with the defendant. The plaintiffs have therefore failed to sustain their burden of proving that their causes of action arose out of a contract made in Connecticut.
The second issue is whether the plaintiffs' causes of action arose out of a contract to be performed in Connecticut (the second half of the conjunctive in General Statutes § 33-929(f)(1)). The defendant argues that the only "performance" that could have occurred in Connecticut is the mailing of payment from Centennial to the defendant, and that this was merely an incidental act of performance of the contract that does not fall within § 33-929(f)(1). The plaintiffs counter that the ongoing series of contractual transactions between Centennial and the defendant, including statements and bills sent to Connecticut and payments mailed from Connecticut, are sufficient to invoke jurisdiction under § 33-929(f)(1).
The Supreme Court interpreted the predecessor statute to General Statutes § 33-929(f)(1) in Lombard Bros., Inc. v. General Asset Management Co., 190 Conn. 245, 254, 460 A.2d 481 (1983). The Court stated that § 33-411(c)(1), which was identical to the current § 33-929(f)(1), required courts to inquire "not only into the various elements of the plaintiff's cause of action . . . but also into the totality of contacts which the defendant may have had with the forum." Lombard Bros., Inc. v. General Asset Management Co., supra, 190 Conn. 254. "Arguably, even incidental acts of performance of contracts in this state would come within our statute if the defendant had other significant contacts with this state." Id., 256-57.
The facts of Lombard Bros. are similar to the facts of the present case. There the defendant was a securities dealer who did business only in New York. It entered into a series of discrete trading transactions with the Connecticut plaintiff. Pursuant to these contracts, it sent 145 confirmations to the plaintiff, and the plaintiff transferred funds to the dealer. The cause of action arose out of one of these contracts. The dealer had dealt with twelve other Connecticut customers, whose trades represented .6 percent of the defendant's business. Id., 255. The Court found that the trades were substantially made and executed in New York and "neither the plaintiff's preliminary transfer of funds from Connecticut nor the defendant's confirmatory sending of notices to Connecticut can alter the manner and the place that [the defendant] chose to do business. At best, the fund transfers and the confirmation slips were incidental to the New York contracts." Id., 256. Because the Court found that the defendant did not have other significant contacts with the state, these incidental acts of performance were insufficient to prove that General Statutes § 33-411(c)(1) conferred jurisdiction over the defendant. Id., 257.
The plaintiffs here argue that the defendant's practice of sending statements and bills to Centennial in Connecticut and Centennial's mailing of payments from Connecticut constitute substantial performance of the contracts in Connecticut. These mailings back and forth, however, are directly analogous to the fund transfers and confirmation slips found to be mere incidental acts of performance in Lombard Bros. As the court explained: "Arguably, even incidental acts of performance of contracts in this state would come within our statute if the defendant had other significant contacts with this state," Id., at 256-57, but the defendant's contacts with Connecticut in the present case are no more significant than those of the defendant in Lombard Bros. The plaintiffs' causes of action thus do not arise out of a contract to be performed in Connecticut under the meaning of General Statutes § 33-929(f)(1).
The plaintiffs ask the court to follow Teleco Oilfield Services, Inc. v. Skandia Ins. Co., 656 F.Sup. 753, 757 (D.Conn. 1987), in which the District Court found that a Connecticut plaintiff's payment of insurance premiums to out of state insurance providers (the defendants) and the receipt of payments on claims by the plaintiff in Connecticut constituted "actual and substantial performance of the terms of the contract" in Connecticut sufficient to satisfy General Statutes § 33-411(c)(1). Assuming this District Court case was correctly decided, the instant case is far more similar to Lombard Bros., where the agreement was substantially performed out of state and the statements and payments sent to and from Connecticut and were found by the Supreme Court to be incidental to the contract. Centennial brought the helicopter to Pennsylvania and the defendant performed the inspection in Pennsylvania. Moreover, the defendants in Teleco were involved in "numerous other contacts" in Connecticut, while the defendant in this case, as stated above, has no other significant contacts with Connecticut. Id., 759. See also AMCI Minerals Corp. v. Kerry Steel, Inc., Superior Court, judicial district of Stamford-Norwalk, Docket No. CV 03 0197368 (November 30, 2004, Lewis, J.T.R.) (stating fact that agreement required payment to be delivered to Connecticut is by itself insufficient to confer jurisdiction).
The plaintiffs' next argument is that General Statutes § 33-929(f)(2), which gives the court jurisdiction over any cause of action arising "out of any business solicited in this state by mail or otherwise if the corporation has repeatedly so solicited business . . ." confers jurisdiction over the defendant. "For purposes of [§ 33-929(f)(2)] a plaintiff's `cause of action aris[es] . . . out of business solicited in this state' if, at the time the defendant engaged in solicitation in Connecticut, it was reasonably foreseeable that, as a result of that solicitation, the defendant could be sued in Connecticut by a solicited person on a cause of action similar to that now being brought by the plaintiffs." Thomason v. Chemical Bank, 234 Conn. 281, 296, 661 A.2d 595 (1995). "When a corporation solicits business in a geographically focused area, it must reasonably expect to be sued in the courts of that area in any dispute arising from or concerning the business so solicited. Where, by contrast, a company's advertising is not so placed or designed as to solicit business in a particular area, no comparable expectation of being sued in local courts can be said to arise." (Internal quotation marks omitted.) Nevins v. American Airlines, Inc., Superior Court, judicial district of New Britain, Docket No. CV 98 0487829S (October 12, 2000, Kocay, J.) ( 28 Conn. L. Rptr. 415).
The solicitation done by the defendant in the present case is virtually identical to that of the defendant in Liberty Aircraft v. Atlanta Jet, Superior Court, judicial district of New Haven, Docket No. CV 99 042892S (October 10, 2000, Munro, J.) ( 28 Conn. L. Rptr. 398), where the court granted a motion to dismiss for lack of personal jurisdiction. In that case, the defendant's solicitation consisted of "advertisements in magazines that are worldwide and sold in Connecticut, its advertisements on the Internet, via the world wide web, that are accessible in Connecticut, and a letter to plaintiff soliciting interest in selling an airplane to defendant . . ." The court noted that Thomason v. Chemical Bank, supra, 234 Conn. 298, which found advertising to meet the long-arm requirements, focused on the fact that the advertising in that case "specifically encouraged Connecticut residents" to do business with the company. See also Frazer v. McGowan, 198 Conn. 243, 251, 502 A.2d 905 (1986) (finding a Rhode Island hospital subject to long-arm statute where it "took affirmative measures designed to attract Connecticut patients," such as by granting admitting privileges to a significant number of physicians who practiced in Connecticut). Like the advertising in the present case, "[n]othing in the advertisements at issue [in Atlanta Jet] specifically targeted Connecticut residents for solicitation, nor offered any special service, product, pricing or other advantage to Connecticut residents. Instead they were advertisements targeting the entire world community . . . [T]he advertisements offered nothing to entities in Connecticut that was not generally available to all, everywhere." Liberty Aircraft v. Atlanta Jet, Superior Court, judicial district of New Haven, Docket No. CV 99 0428927S (October 10, 2000, Munro, J.)
The plaintiffs note that Atlanta Jet based its reasons for denying jurisdiction in part on the fact that the agreement between the parties in that case contained a stipulation that Georgia, and not Connecticut, was where the agreement was deemed to have been made. This fact, however, was only relevant in that court's discussion of whether the cause of action in Atlanta Jet arose out of a contract "made in Connecticut" under General Statutes § 33-929(f)(1); the court did not consider this fact in its solicitation analysis under § 33-929(f)(2).
The plaintiffs further argue that, while the defendant's advertising on the internet targeted a general community, its advertisements in Air Beat Magazine targeted a specific group of people, the members of the Airborne Law Enforcement Association (ALBA). They note that Centennial was a member of ALBA and that ALEA's Northeastern Regional Director was located in Connecticut. The evidence demonstrates, however, that the magazine, with a circulation of over 8,000, is distributed worldwide that the other members of ALEA's Board of Directors are located in Texas, New York, Ontario, Alberta, Ohio, and Florida, and that only one of the 13 board members was located in Connecticut. These facts do not tend to show that the defendant "specifically targeted Connecticut residents." See also Goldstein v. Nutrition Now, Inc., Superior Court, judicial district of Waterbury, Docket No. CV 96 0150429 S (August 9, 1999, Sheldon, J.).
Finally, the plaintiffs cite Inset Systems, Inc. v. Instruction Set, Inc., 937 F.Sup. 161 (D.Conn. 1996) for the proposition that its internet advertising was sufficient to satisfy the "solicitation of business" provision of General Statutes § 33-929(f)(2). Noting that the internet included at least 10,000 access sites in Connecticut, that case concluded that "advertising via the internet is solicitation of a sufficient repetitive nature to satisfy . . . the Connecticut long-arm statute." Inset Systems, Inc. v. Instruction Set, Inc., supra, 937 F.Sup. 164. Inset Systems was distinguished by the District Court in E-DATA Corp. v. Micropatent Corp., 989 F.Sup. 173, 176 (D.Conn. 1997), however, "Unlike in Inset Systems where Connecticut Web users could view defendant's solicitations using plaintiff's trademarked name by typing defendant's Web address, or even merely by viewing defendant's allegedly infringing domain name on a Web browser directory, in this case, a Connecticut user must play a more active role in order to view any solicitation by [defendant]. Specifically, the Connecticut user must find defendant's Web address, access it, view and browse the information and photographs available at the site. Thus, the activity necessary for a Connecticut consumer to be solicited by West Stock on the Internet is distinguished from the more passive type of Web solicitation in Inset Systems." See also FF Screw v. Clark Screw Machine Products Co., Superior Court, judicial district of Hartford (December 10, 2002, Berger, J.) ( 33 Conn. L. Rptr. 534) (following E-DATA Corp.).
That distinction is irrelevant in this case. Inset Systems and E-DATA Corp. were concerned with whether internet advertising was "of a sufficient repetitive nature" to satisfy the long-arm statute. Regardless of whether the activity necessary for a Connecticut consumer to be solicited by the defendant's internet advertising in the present case is considered active or passive, there is no evidence that the internet advertising of the defendant here specifically targeted Connecticut residents. Because there is no evidence that the internet advertising of the defendant specifically targeted Connecticut residents, General Statutes § 33-929(f)(2) does not confer jurisdiction over the defendant in this case.
Because it has concluded that the requirements of the long-arm statute have not been satisfied, the court need not go on to decide the due process issue. Knipple v. Viking Communications, supra 236 Conn. 606. The defendant's motion to dismiss is therefore granted.