Opinion ID: 2634764
Heading Depth: 3
Heading Rank: 1

Heading: agd

Text: In its complaint, Archangel alleges the following: that its principal place of business is in Colorado; that AGD directed numerous communications to Archangel in Colorado, including letters, faxes, and telephone calls; that AGD's communications to Archangel in Colorado concerned the parties' contractual agreements and were designed to facilitate an illegal scheme; that Archangel and AGD entered into the 1999 Agreement in an attempt to resolve their disputes; and that Archangel spent money in reliance on AGD's statements. The complaint also indicates that Archangel operates a Russian satellite office. Further, it alleges that the Russian court system is corrupt, and that the Russian and Canadian governments were both involved in attempting to resolve this dispute even after Archangel moved to Colorado. AGD responds to Archangel's initial jurisdictional allegations with the affidavits of one of its lawyers and the deputy chairman of its board of directors. The affidavits show that Archangel has minimal business operations in Colorado. The affidavits also demonstrate that AGD is a Russian company to the extent that: it is incorporated under Russian law; it is the successor to a Russian state-owned enterprise; its principal place of business is in Russia; it is in the Russian oil, gas, and mining business; it conducts all sales and production activities in Russia; and all of its 4,500 employees live and work in Russia. Further, AGD demonstrates that its Colorado contacts are negligible to the extent that: it is not authorized to conduct business in Colorado; it has no agent designated to accept service in Colorado; it does not have any property interests of any kind in Colorado; it has not conducted any financial transactions in Colorado; and it has no assets of any kind here. Importantly, AGD also shows that the agreements from which the claims in this case arise were negotiated and executed in Russia and concern the mining of Russian diamonds, the formation of a Russian joint stock company, and the award and transfer of a diamond license issued by the Russian government. AGD also sets forth evidence that the parties agreed to arbitrate their disputes arising from the 1993 Agreement in Sweden, and that any disputes arising from the 1994 Agreement were to be resolved in the Russian court system. AGD shows that Archangel has been a successful participant in lawsuits held in the Russian court system based on the same contracts at issue here. Additionally, AGD shows that much of the evidence needed for trial is located in Russia and is in the Russian language, and that many of the likely witnesses live and work in Russia. Archangel controverts AGD's evidence with affidavits from two of its corporate officers. These affidavits set forth competent evidence establishing that its principal place of business was in Colorado beginning in January of 1998. Archangel's CEO also states that he believe[s] that AGD effected a scheme, beginning in late 1995-early 1996, to deceive [Archangel] into believing that AGD would honor its obligations to [Archangel], when it had no intent to do so, in order to obtain financial and other benefits from [Archangel]. Additionally, Archangel provides competent evidence that it made several million-dollar payments from Colorado after relying on AGD's representations concerning the agreements. Archangel also details the time frames and subject matter of approximately 13 of the 75 communications it received from AGD in Colorado. These communications, most of which are attached as exhibits, include: 1) a March 17, 1998, memorandum from an agent of AGD and Lukoil allegedly sent to Archangel in Colorado stating that AGD had no claims against Archangel, that all parties to the 1994 Agreement were planning on honoring it, and that both the 1993 and 1994 Agreements remained in full effect; 2) a letter dated April 3, 1998, which was transmitted to Archangel in Colorado by an agent of AGD and Lukoil, in which Lukoil's president, in what appears to be a response to a prior letter sent by Archangel, indicates that Lukoil adheres to principles of continuity and execution of the previously concluded agreements, and [it] conducts its business in connection with the purchase of equity in [AGD] while staying true to the very same principles; 3) a March 5, 1998, letter by agents of AGD and Lukoil faxed to Archangel in Colorado indicating that AGD does not renounce (or withdraw from) the obligations it has from the 1993 and 1994 Agreements; 4) a telephone call in May or June 1998, from Usmanov, who owned a part of AGD and was responsible for AGD's activities under the 1994 Agreement, to Archangel's CEO in Colorado indicating that [Archangel's CEO] should meet with him in Moscow as soon as possible; 5) a telephone call sometime during the week of May 25, 1999, from AGD's chairman indicating that Usmanov wanted to meet with Archangel's CEO to resolve their disputes relating to the 1993 and 1994 Agreements; 6) a July 23, 1999, letter from AGD's chairman, that was addressed and telecopied to Archangel's CEO in Colorado, indicating that AGD was in compliance with the 1999 Agreement and that they hoped that Archangel would also comply with the Agreement; 7) a July 27, 1999, letter from AGD's deputy general director and legal counsel, addressed and telecopied to Archangel's CEO in Colorado in response to a letter sent by Archangel, indicating inter alia, that it was in compliance with the 1999 Agreement and would continue to be; 8) phone calls from AGD and its agents from July to August of 1999, to the effect that AGD wanted to issue a joint press release announcing that an agreement had been reached and the diamond license would be transferred to the Russian joint stock company; 9) a letter of August 4, 1999, from AGD's deputy general director and legal counsel telecopied to Archangel in Colorado, in response to a letter and draft of a joint press release sent by Archangel to AGD, enclosing its own proposed joint press release to the effect that all parties would adhere to the 1999 Agreement; 10) an August 10, 1999, letter from AGD's deputy general director and legal counsel telecopied to Archangel in Colorado in response to an earlier letter sent by Archangel enclosing a modified draft of the joint press release stating that [the 1999 Agreement] fully resolves all of the differences between the parties, and that it is binding and will be adhered to by all parties. Now, therefore, a conflict between AGD and Archangel is completely and fully behind us.; 11) an October 13, 1999, letter from AGD's chairman to Archangel in Colorado in response to a fax received by Archangel, which states inter alia, that [AGD] is starting to doubt whether it is any use to continue discussions on [disputed] issues, and that [AGD] once again categorically [rejects] any and all claims that AGD violates the [prior agreements] and confirms our willingness and readiness to live by it. We express hope that we will encounter a similar reaction from [Archangel], this time not only in words.; 12) an open letter from AGD's chairman to shareholders dated January 26, 2000, and copied to Archangel, giving assurances that AGD would fulfill everything necessary to achieve the purposes of the [prior agreements] and to transfer the [diamond license] to the joint legal entity.; 13) a letter of January 31, 2000, by AGD's general director in response to an earlier fax sent by Archangel stating that AGD, using the latest changes in the Russian legislation, would be ready to transfer the [diamond] license to [the joint stock company] by way of addressing an appropriate application to the Ministry of Natural Resources of the Russian Federation, to the Administration of the Archangelsk Oblast, and to other relevant authorities. From the above facts we discern factual disputes regarding the time period that Archangel had its principal place of business in Colorado, and whether Russia is a viable forum for trial. We must resolve these conflicts in Archangel's favor for purposes of the 12(b)(2) motion. Nonetheless, we conclude that AGD's communications with Archangel in Colorado do not raise the inference that Colorado has specific jurisdiction over AGD. We note that Archangel attempts to subject AGD to jurisdiction in Colorado based on the approximately 75 communications from AGD to Archangel in Colorado. As we begin our review of these jurisdictional facts, it is perhaps most striking that the only reason AGD communicated with Archangel in Colorado at all was because Archangel unilaterally decided to move its principal place of business here. This is especially important in light of the fact that all of the 75 alleged communications by AGD to Colorado concern the resolution of disputes pertaining to the 1993 and 1994 Agreements. These contractual disputes did not arise when Archangel was a Colorado resident. To the contrary, the parties' contractual disputes arose in late 1995-early 1996 when Archangel's principal place of business was in Canada. Under these circumstances, if we were to give significant weight to AGD's Colorado contacts alleged by Archangel, we would be condoning Archangel's tactic of essentially forcing AGD to subject itself to litigation in our courts if it in any way communicated with Archangel in Colorado in an attempt to resolve the parties' ongoing disputes that arose years earlier in a foreign jurisdiction. We cannot sanction the effects of such unilateral action on behalf of Archangel and we therefore find that the significance of AGD's contacts in relation to the agreements, all of them, is of much less weight accordingly. We further note that the 1993 and 1994 Agreements, as well as the 1999 Agreement, do not show any purposeful availment on the part of AGD. It is undisputed that the contracts at issue here were negotiated and executed in Russia and pertain to the mining of diamonds on Russian soil, the creation of a Russian diamond-development company, and the award of a diamond license by the Russian government. Further, any disputes that arose from these contracts were to be resolved in Sweden pursuant to United Nations-approved rules or in the Russian court system. In this sense, none of the prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), have anything to do with Colorado beyond the fact that Archangel's principal place of business was here beginning in 1998. This conclusion is buttressed by the fact that Archangel alleges in its complaint that it has a satellite office in Russia. Based on the aforementioned analysis of the jurisdictional facts, we conclude that AGD's contacts with Archangel in Colorado are merely of the random, fortuitous, or attenuated nature and do not raise an inference that AGD purposefully availed itself of the privilege of conducting business here. Archangel argues that our decision in Waterval v. Dist. Ct., 620 P.2d 5 (Colo.1980), dictates a finding of specific jurisdiction over AGD. However, that case is distinguishable. Waterval involved an attorney/client relationship that began in Virginia and continued after the plaintiff moved to Colorado. 620 P.2d at 7. There, the client's claims arose almost entirely from an investment account that she opened while she was a Colorado resident, and the dispute did not arise until many years after the client had moved to Colorado. Id. Here, however, the vast majority of Archangel's claims pertain to contracts that were negotiated and executed in Russia while it was a Canadian resident. Also, Archangel moved to Colorado after disputes had arisen against AGD. [5] Further, although we note that Archangel entered into the 1999 Agreement with AGD while it was a Colorado resident, because that agreement concerns only the resolution of disputes arising in late 1995 from the pre-Colorado 1993 and 1994 Agreements, the 1999 Agreement does not create any continuing obligations independent from the Russian-focused earlier contracts. Insofar as the arising out of prong of the specific jurisdiction inquiry is concerned, we conclude that Archangel has failed to raise an inference that AGD's actions giving rise to the litigation create a substantial connection with Colorado. As we pointed out earlier, it is undisputed that all of the 75 communications by AGD into Colorado concerned the 1993, 1994, and 1999 Agreements. That AGD's communications into Colorado were based on such Russian-oriented agreements portends a very slight nexus between AGD's communications to Archangel and Colorado. Further, the Russian and Canadian governments' involvement in the attempt to resolve this dispute even after Archangel moved to Colorado reflects the nature of Archangel's claims and the extent to which they did not really arise out of AGD's contract-related communications to Archangel in Colorado. In its attempt to subject AGD to the jurisdiction of the Colorado courts, Archangel relies on two Colorado cases holding that, where a defendant's intentional, and allegedly tortious, actions, taken outside the forum, are expressly directed at causing a harmful effect within the forum state, a sufficient nexus exists between the defendant and the state so as to satisfy due process. D & D Fuller CATV Constr. Inc. v. Pace, 780 P.2d 520, 525-26 (Colo.1989)(interpreting Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984)); Classic Auto Sales, Inc. v. Schocket, 832 P.2d 233 (Colo.1992). As such, Archangel contends that its allegations of AGD's fraudulent conduct, in combination with AGD's alleged contacts set forth in the complaint and affidavits, are sufficient to invoke the jurisdiction of the Colorado courts over AGD. We disagree with Archangel under these circumstances. D & D Fuller involved husband and wife Colorado residents who filed for divorce. 780 P.2d at 521-22. During the divorce proceedings, the wife obtained a restraining order against the husband that prevented him from seeing the couple's son. Id. at 521. The husband subsequently kidnapped the son and went into hiding. Id. The husband's parents played an active role, both individually and as agents of their company, in concealing the whereabouts of the husband and son from the authorities, incurring several contacts with various Colorado state agencies, banks, businesses, and residents. Id. at 521-23. There were allegations that the husband's mother made threatening phone calls into Colorado and that the husband's father was in Colorado at some point. Id. at 522. In determining that it was consistent with due process to subject the husband's parents and their company to Colorado's jurisdiction we held: The acts allegedly committed by the petitioners were directed at interfering with [the child's] relationship with his mother, avoiding the dictates of the Colorado restraining order, aiding in concealing [the child] from his legal custodian, and preventing his return to Colorado. Thus, Colorado was the focal point of both the petitioner's actions and the effects of those actions. Id. at 525 (emphasis added). Classic Auto Sales, announced three years after D & D Fuller, involved a Colorado plaintiff who purchased a car based on an ad he saw in two nationally circulated magazines. 832 P.2d at 234. After engaging in four or five telephone calls with the Nebraska defendant, plaintiff purchased the car based on defendant's representations about it. Id. Several months after he bought it, the plaintiff discovered that the car was not the model represented by the defendant and brought suit alleging fraud, concealment, negligent misrepresentation, and deceptive trade practices. Id. at 235. Relying on D & D Fuller, we determined that the alleged telephone conversations, especially taken together with the magazine advertisements, were sufficient minimum contacts to subject the defendants to jurisdiction of Colorado courts in light of the effects that the Colorado plaintiff suffered here. Id. at 237 (internal quotations omitted). Both D & D Fuller and Classic Auto Sales are based on the Supreme Court's decision in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984). In Calder, a California resident sued two Florida resident employees of the National Enquirer in California court alleging libel, intentional infliction of emotional harm, and invasion of privacy. Id. at 785-86. The Supreme Court concluded that the defendants' California contacts were sufficient to meet the minimum contacts requirement of due process. Id. at 788-89. The Court determined: The allegedly libelous story concerned the California activities of a California resident. It impugned the professionalism of an entertainer whose television career was centered in California. The article was drawn from California sources, and the brunt of the harm, in terms of both emotional distress and the injury to [the plaintiff's] professional reputation, was suffered in California. Id. After noting that California was both the focal point of the libelous story and of the harm suffered, the court held that California could properly exercise jurisdiction over the Florida defendants based on the `effects' of their Florida conduct in California. Id. at 789. Contrary to Archangel's contention, we cannot conclude that the rule set forth in Calder and applied in D & D Fuller and Classic Auto Sales allows an exercise of personal jurisdiction over AGD in these circumstances. Rather, we agree with the Tenth Circuit Court of Appeals' analysis of a similar factual setting in Far West Capital, Inc. v. Towne, 46 F.3d 1071 (10th Cir.1995). There, Towne, the defendant and a Nevada resident, owned property in Nevada that the Utah plaintiff, Far West Corporation, had an interest in developing. Id. at 1073. The negotiations took place in Nevada, but Towne sent several communications, including letters and faxes, to Far West in Utah. Id. The parties also set up an escrow account in Utah. Id. As the negotiations progressed, Towne also hired a Utah resident as her consultant, who in addition to lending his expertise about geothermal resources, picked up drafts of leases from Far West in Utah and forwarded the drafts to Towne. Id. Towne and Far West eventually entered into a lease agreement which required that any disputes arising from the contract be governed by Nevada law. Id. Shortly after entering into the agreement, Far West negotiated a sub-lease with a third party to build a power plant on the property. Far West, 46 F.3d at 1074. As part of the financing arrangement relating to the sublease, the third party required certain stipulations between Far West and Towne. Id. After Towne refused to agree to certain stipulations, Far West brought suit in Utah federal court alleging breach of contract and several business torts including bad faith breach of contract, intentional interference with contractual relations, and economic duress. Id. In analyzing the effects test set forth in Calder, after reviewing several post- Calder decisions, the Far West court concluded: [T]he mere allegation that an out-of-state defendant has tortiously interfered with contractual rights or has committed other business torts that have allegedly injured a forum resident does not necessarily establish that the defendant possesses the constitutionally required minimum contacts. Instead, in order to resolve the jurisdictional question, a court must undertake a particularized inquiry as to the extent to which the defendant has purposefully availed itself of the benefits of the forum's laws. Id. at 1079. Applying this narrow interpretation of the Calder effects test, the court of appeals affirmed the district court's conclusion that the exercise of Utah's jurisdiction over Towne would violate due process even though Far West alleged intentional torts and that it suffered injury in Utah. See id. at 1075. Specifically, the Tenth Circuit concluded that, unlike the situation in Calder, Towne's actions were not expressly aimed at Utah and Utah was not the focal point of the tort and its injury. Far West, 46 F.3d at 1080. The court summarized the circumstances in that case by noting, [i]n short, there is no indication that Utah had anything but a fortuitous role in the parties' past dealing or would have any role in their continuing relationship. Id. The narrow reading given by the Tenth Circuit to the Calder effects test is compatible with the due process inquiry that has traditionally focused on the relationship among the defendant, the forum, and the litigation. Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). Such a construction mandates an inquiry as to the extent to which the defendant has purposefully availed itself of the benefits of Colorado's laws. Far West, 46 F.3d at 1079. Applying this principle to our case, our analysis leads us to conclude that AGD has not purposefully availed itself of the privilege of conducting business in Colorado. [6] AGD's attenuated and fortuitous contacts, coupled with the remote nexus between AGD's Colorado contacts and this litigation, fail to raise an inference of specific jurisdiction over AGD.