Opinion ID: 2634874
Heading Depth: 2
Heading Rank: 1

Heading: the court of appeals erred by interpreting utah's long-arm statute too narrowly

Text: ¶ 12 Utah's long-arm statute provides: [A]ny person ... whether or not a citizen or resident of this state, who, in person or through an agent, does any of the following enumerated acts is subject to the jurisdiction of the courts of this state as to any claim arising out of or related to [the enumerated acts]. [12] The relevant enumerated acts in this case are (1) the transaction of any business within this state and (2) the causing of any injury within this state whether tortious or by breach of warranty. [13] ¶ 13 The court of appeals concluded that Pohl could not satisfy the tortious injury requirement because the causing of financial injury to a Utah business has been flatly rejected by the Utah courts as a basis for exercising personal jurisdiction. [14] We hold that the court of appeals interpreted this requirement too narrowly. The court of appeals also held that the transaction of any business requirement could not be met because the defendants did not physically conduct[] business within Utah or purposefully direct[] mail or wire communications to Pohl in Utah. [15] Although we clarify that this limitation is more properly recognized as a due process limitation on jurisdiction, we agree with the court of appeals on this point.
¶ 14 The court of appeals erroneously concluded that `the causing [of] financial injury to a Utah business has been flatly rejected by the Utah courts as a basis for exercising specific personal jurisdiction.' [16] This interpretation of the injury requirement is erroneous because it unnaturally constricts the plain language of the long-arm statute and does not comport with legislative intent. Moreover, it oversimplifies the case law regarding long-arm jurisdiction. ¶ 15 The plain language of the long-arm statute asserts jurisdiction over claim[s] arising out of or related to the causing of any injury within this state whether tortious or by breach of warranty. [17] Nothing in the plain language of the statute distinguishes between financial injuries and other injuries. Furthermore, section 78B-3-205 expressly states the legislature's intent that the long-arm statute be applied so as to assert jurisdiction over nonresident defendants to the fullest extent permitted by the due process clause of the Fourteenth Amendment to the United States Constitution. [18] We have explicitly upheld that policy, and any defendant arguing that the long-arm statute is less comprehensive than the Due Process Clause faces an uphill battle, as we have stated in the past that any set of circumstances that satisfies due process will also satisfy the long-arm statute. [19] ¶ 16 While it is true that financial injury alone cannot establish jurisdiction because such a rule would lead to the unacceptable proposition that jurisdiction could be established anywhere a plaintiff might locate, [20] the suggestion that financial injuries cannot provide the basis for jurisdiction at all is an oversimplification of the law. The cases relied on by the court of appeals in concluding that economic injuries provide an insufficient basis for jurisdiction are cases in which the only injuries suffered in the state were the economic consequences of torts directed elsewhere. ¶ 17 For example, in Harnischfeger Engineers, Inc. v. Uniflo Conveyor, Inc., no tortious injury occurred in Utah. [21] The plaintiff's tortious injury argument was based on a letter sent by the defendant's Kansas office to a postal service employee in Tennessee. [22] The defendant also sent copies of the letter to Virginia and to Illinois, but the letter was never published in Utah. [23] Thus, the tortious injury was caused in Kansas, Virginia and Illinois, but not in Utah. The letter [did] not implicate Utah in anyway, but the plaintiff argued that tortious injury occurred in Utah because the plaintiff's business in Utah suffered because of the letter. [24] The court properly rejected this argument as an insufficient basis for jurisdiction. [25] While the economic consequences of the tortious injury may have been felt in Utah, the tortious injury itself was not caused in Utah. ¶ 18 Similarly, in Patriot Systems, Inc. v. C-Cubed Corp ., the plaintiff, a Utah corporation that developed, manufactured, and sold computer software, alleged that the defendant, a computer software company in Virginia, had intentionally interfered with economic relations, misappropriated trade secrets, infringed the plaintiff's copyright, and engaged in unfair competition. [26] The court found that the plaintiff had failed to demonstrate that the long-arm statute reached the defendant because the plaintiff did not allege[] defendant committed these acts in Utah. Rather, the essence of plaintiff's complaint is that, because of defendant's conduct, plaintiff has suffered financial injury in Utah where it does business. [27] Again, the plaintiff felt the injury in Utah, but the torts occurred elsewhere and there was no evidence that the defendant had directed its tortious activity at Utah. These cases stand for the proposition that a plaintiff cannot claim that a tortious injury has been caused in Utah by showing a diminished bank account in Utah when the tortious activity was not directed toward Utah. ¶ 19 We acknowledge the analytical difficulty of distinguishing between the satisfaction of minimum contacts in the due process analysis and the satisfaction of the long-arm statute. For this reason, we often assume the application of the statuteand go straight to the due process issue. [28] Nevertheless, it is important to articulate whether the limitation on jurisdiction stems from the breadth of the long-arm statute or whether it stems from the principles of due process. Contrary to the court of appeals' conclusion, the plain language of the long-arm statute does not exclude financial injuries caused by tortious actions, and any such limitation must come from the Due Process Clause, which we analyze below. ¶ 20 Thus, to satisfy the long-arm statute requirement, a plaintiff must allege only that the defendants caused a tortious injury in Utah and that the plaintiff's claims arise out of the tortious injury. Pohl has satisfied this requirement by alleging that it was the target of a civil conspiracy to commit tortious interference with Pohl's contract and to interfere with Pohl's prospective economic relations. Pohl has alleged that the defendants directed their conspiracy toward Utah and knew that their actions would harm Pohl in Utah. Moreover, in contrast to the two cases discussed above, Pohl has also articulated injuries suffered in Utah that consist of more than a diminished bank account. For example, Pohl's primary place of business is Utah, where it spent money and resources to satisfy the panel order. In addition, after purported measurement errors delayed the production schedule, Pohl entered into a contract with its parent company in Germany to expedite delivery of the panels. Finally, Pohl will not recover any of these expenses as a result of the defendants' allegedly tortious activities. These injuries are the direct result of the defendants' alleged tortious interference with the contract. Therefore, Pohl successfully pled facts showing that the defendants caused tortious injuries in Utah and accordingly Pohl satisfied the requirement of the long-arm statute.
¶ 21 Pohl also argues that the long-arm statute applies to the defendants because they transacted business in Utah. The legislature broadly defined the transaction of business within this state as the activities of a nonresident person, his agents, or representatives in this state, which affect persons or businesses within the state. [29] Pohl argues that the use of Pohl panels on the Project required the defendants to communicate with Pohl through a series of letters and faxes regarding the dimensions and specifications of the panels, and that these communications constitute the transaction of business and bring the defendants within the reach of the long-arm statute. Pohl's argument seems to rely on two underdeveloped theories. First, these communications affected Pohl because in response to the scheduling demands imposed by Bret Miller, ISME and Webelhuth, Pohl contracted with its parent company in Germany to fabricate the panels and arranged for air freight from Germany. Second, TAB acted as an agent or a representative for Bret Miller, ISME and Webelhuth because TAB's communications with Pohl made the procurement of the panels possible and the panels were necessary to complete the project. ¶ 22 The court of appeals rejected Pohl's argument, concluding that the plain language of the statute requires that at least some activities must occur within Utah. [30] While we believe that this requirement is more properly recognized as a due process limitation, we agree with the result reached by the court of appeals because we do not believe that the defendants purposefully directed their efforts toward conducting business in Utah. [31] To the contrary, it appears that the defendants purposefully avoided conducting business in Utah by hiring TAB as a subcontractor responsible for hiring Pohl. While Pohl may be able to satisfy minimum contacts by showing that TAB acted as an agent or a representative of the defendants in Utah, Pohl has not developed this argument beyond a statement of facts suggesting this type of relationship. Because the agency argument was not thoroughly developed, and because we conclude that Pohl can satisfy the long-arm statute based on the tortious injury requirement, we need not, and do not, decide whether the facts alleged by Pohl are sufficient to support a finding that defendants transacted business in Utah.