Opinion ID: 1404850
Heading Depth: 2
Heading Rank: 2

Heading: jurisdiction over asc i and individual corporate officers

Text: The current controversy arose after the dissolution of ASC I as a New York corporation and its reformation as a New Jersey corporation. The contested invoices relate only to the New Jersey corporation, ASC II. There is no cause of action against ASC I arising out of that corporation's activity in Utah, and specific personal jurisdiction may be exercised only where `the cause of action arises out of or has substantial connection with the [in state] activity.' Synergetics, 701 P.2d at 1110 (quoting Mallory, 618 P.2d at 1008). Therefore, we hold that this state cannot exercise long-arm jurisdiction over ASC I. We note, however, that according to the record before us the only difference between the original and successor corporation was the place of incorporation. Even the business address remained the same, and business continued as usual. The corporation did business under the name of ASC both before and after the reformation, and the record does not indicate that any of the documents that SII received were altered. Indeed, ASC did not even notify SII of the change. ASC II continued to function under the original distribution agreement; therefore, its orders for SII products were made pursuant to that agreement. See 19 Am.Jur.2d Corporations §§ 2631, 2647 (1986) (stating successor corporation succeeds to all obligations, agreements, and assets of original corporation). SII joined corporate officers Corcoran and Danielak as defendants. It contends that Utah has jurisdiction over those individual defendants because they transferred assets from ASC I to ASC II. However, specific personal jurisdiction arises only out of the actual transactions between the defendant and the forum state. Minimum contacts must be found as to each defendant over whom the court exercises jurisdiction, Home-Stake Prod. v. Talon Petroleum, C.A., 907 F.2d 1012, 1020 (10th Cir.1990) (citation omitted), and a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum state. Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (citations omitted). Additionally, the contested obligations must arise out of [and be] connected with the activities within the [forum] state. International Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The asset transfer occurred before the present dispute arose and SII has failed to show any connection between the transfer, the dispute, and Utah. Therefore, Utah cannot assume long-arm jurisdiction over Corcoran and Danielak individually.
Although we have concluded that the Utah long-arm statute does not provide a basis for the exercise of personal jurisdiction over ASC I, Corcoran, and Danielak by Utah courts, SII nevertheless argues that the state district court erred in dismissing the action against these defendants. In particular, it asserts that these defendants waived their objection to personal jurisdiction by submitting to the federal court's personal jurisdiction without objection. When a federal court acquires subject matter jurisdiction on the basis of diversity, the federal court must apply the law of the forum state, see Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to determine if a state court would exercise personal jurisdiction over the defendant. [4] And [i]f the state court lacks jurisdiction of the ... parties, the federal court acquires none.... Baltimore & Ohio R.R., 258 U.S. at 382, 42 S.Ct. 349. A federal court sitting in diversity can render a valid judgment only if the state in which it sits would have had personal jurisdiction over the defendant. Thus, there is only one source of personal jurisdiction law in diversity cases  state law. A federal court sitting in diversity is really an extension of the forum state court. When a defendant consents to personal jurisdiction in a federal court sitting in diversity, that defendant necessarily consents to the forum state's exercise of personal jurisdiction. Allowing a defendant to waive personal jurisdiction in the federal court but later contest the exercise of jurisdiction in a state court is tantamount to allowing a defendant to waive jurisdiction in one district court in Utah but contest it in another district court. The requirement of personal jurisdiction operates to protect defendants from the burdens of litigating in a distant or inconvenient forum and acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-292, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); see also Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702-03, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982) (providing that because [t]he personal jurisdictional requirement recognizes and protects... an individual right, it can, like other such rights, be waived). ASC, Corcoran, and Danielak did not try to avoid litigating in a Utah forum; they only wanted to avoid litigating in a Utah state court. They had this option through removal but lost it because of their own untimeliness. Therefore, we hold that they waived any objection to personal jurisdiction of Utah courts over them.