Court Opinion

ID: 9562628
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:32:13.654152+00
Date Added: 2024-06-11T09:17:26.548576
License: Public Domain

STEWART, Justice
(concurring in result):
I agree that defendant Pacific Hydro is properly within the jurisdiction of the Utah courts pursuant to this State’s Long-Arm Statute, § 78-27-22 et seq., U.C.A. (1953), as amended. However, I think the decision should be placed on that part of the Long-Arm Statute, § 78-27-24(3), which establishes jurisdiction for claims arising from “[t]he causing of any injury within this state whether tortious or by breach of warranty.”
The ultimate failure of the drilling rig purchased from defendant Pacific Hydro and the loss of equipment resulting from that failure occurred in Utah. Under the plain terms of § 78 — 27—24(3) defendant allegedly sustained an “injury within this state.” The sole question of substance is whether the exercise of jurisdiction is constitutionally permissible.
In the instant case the defendant sold costly and complicated equipment to a Utah corporate buyer for delivery outside the State of Utah. The equipment malfunctioned, causing damage both out of state and within Utah. In Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761, 766 (1961), the Illinois Supreme Court, in sustaining long-*248arm jurisdiction in somewhat similar circumstances, stated:
As a general proposition, if a corporation elects to sell its products for ultimate use in another State, it is not unjust to hold it answerable there for any damage caused by defects in those products. Advanced means of distribution and other commercial activity have made possible these modern methods of doing business, and have largely effaced the economic significance of State lines.
In the same vein, the Arizona Supreme Court, in Phillips v. Anchor Hocking Glass Corp., 100 Ariz. 251, 413 P.2d 732 (1966), predicated personal jurisdiction on the presence of a single allegedly defective product which resulted in injury within the state. The court rejected an overly literal and narrow construction of Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958),1 for the reason that to do otherwise would revitalize the “implied consent” theory that had been outdated by International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The Arizona court reasoned:
[I]t is apparent that all personal jurisdiction questions cannot be determined by asking whether the defendant purposefully conducted activities within the forum state to obtain the benefits and protections of its laws. Tortious and negligent acts are obvious examples in which it is unrealistic to say that the actors first considered the laws of the state in which such acts were committed. A rule limiting jurisdiction to defendants who “purposefully” conduct activities within the state cannot properly be applied in product liability cases in view of the fortuitous route by which products enter any particular state. Cummins, In Personam Jurisdiction Over Nonresident Manufac- . turers in Product Liability Actions, 63 Mich.L.Rev. 1028. [413 P.2d at 735.]
Numerous state courts have extended personal jurisdiction to out-of-state manufacturers or sellers of products that cause injury in the forum state. In Gray v. American Radiator & Standard Sanitary Corp., supra, the court held jurisdiction attached where the defendant’s defective product caused injury within the forum, because there had been some contemplation of use of the defective product within the state, even though the product came into the state through someone other than the defendant. Similarly, in Ehlers v. U. S. Heating & Cooling Mfg. Corp., 267 Minn. 56,124 N.W.2d 824 (1963), the court extended jurisdiction where the defendant’s only contact with the forum state was a defective boiler which had caused the plaintiff property damage. The court relied on the foreseeability of the boiler’s entry into the state, since it was an item mass-produced for nationwide use.
In Quigley v. Spano Crane Sales & Service, Inc., 70 Wash.2d 198, 422 P.2d 512 (1967), a foreign manufacturer-seller was sued by the purchaser of a crane for damages suffered as a. result of the crane’s failure. The court sustained jurisdiction and stated that where it is contemplated that a manufactured article will be resold and used in other states, but sale in no particular state is contemplated, the state where thé injury takes place will, under the long-arm statute, have jurisdiction over an action arising from injuries caused by a defect in the manufactured article when used as intended by the manufacturer.
A malfunctioning paper press was characterized as a dangerous instrumentality by the Maine court in Foye v. Consolidated Baling Machine Co., Me., 229 A.2d 196 (1967). The court said that a vendor who placed such a product in the hands of a citizen of Maine where it can and does *249cause injury has committed a tortious act subjecting the vendor to the jurisdiction of the courts of that state.
The absence of multiple acts within the state is not fatal to the exercise of state power over a foreign corporation, B. K. Sweeney Co. v. Colorado Interstate Gas Co., Okl., 429 P.2d 759 (1967). In Sweeney the court referred to “the widely spread myth” that a single transaction by an out-of-state defendant may not be the basis for amenability to suit in the state where such transaction occurred and stated it had been effectively “shattered” by approbation of nonresident motorist cases. The court also held that there is no constitutional barrier to holding that a foreign corporation which does a single act or consummates a single transaction in the forum state would be amenable to suit for damages arising out of the transaction, irrespective of whether there are additional contacts with the state.
Numerous other cases have also held that the causing of injury in the state from a product intentionally placed in commerce for distribution to other states is a sufficient “contact” to satisfy due process, e. g., Andersen v. National Presto Industries, Inc., 257 Iowa 911, 135 N.W.2d 639 (1965); Atkins v. Jones & Laughlin Steel Corp., 258 Minn. 571, 104 N.W.2d 888 (1960); and Metal-Matic, Inc. v. Eighth Judicial Dist. Court, 82 Nev. 263, 415 P.2d 617 (1966). But see, e. g., contra, Oliver v. American Motors Corp., 70 Wash.2d 875, 425 P.2d 647 (1967); Hodge v. Sands Mfg. Co., 151 W.Va. 133, 150 S.E.2d 793 (1966); Moss v. City of Winston-Salem, 254 N.C. 480, 119 S.E.2d 445 (1961); and DiMeo v. Minster Machine Co., 225 F.Supp. 569 (D.Conn.1963).
Interpretation of a state’s long-arm statute requires consideration of both the scope of specific statutory language on which jurisdiction is based and constitutional due process requirements. Because the legislature has directed application of the long-arm statute “to the fullest extent permitted by the due process clause,” the statutory and the constitutional inquiries in this case are identical.
This Court, by its decision in this case, states its concurrence with those states which, in keeping with the trend toward liberal application of long-arm legislation, find that personal jurisdiction over a nonresident manufacturer or seller may be based on the presence within the state of a defective product which causes injury in the state, as long as the constitutionally mandated “minimum contacts” test is complied with. World-Wide Volkswagen Corp. v. Woodson, - U.S. -, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Accordingly, defendant Pacific Hydro, pursuant to § 78-27-24(3), is subject to personal jurisdiction in this State, along with the codefendant Portadrill, to answer plaintiff’s allegations concerning damages resulting from the malfunctioning of the drilling rig sold directly to plaintiff Burt, a Utah resident, by Pacific Hydro.
This Court has dealt with long-arm jurisdiction in a number of prior cases. By and large these cases have dealt with actions arising pursuant to § 78-27-24(1) and (2). These subsections apply to causes of action based on the transaction of business within this state or contracting to supply services or goods in Utah. Generally, in these cases, this Court has found the necessary significant minimal contacts on the basis of more than a single act performed within the state. However, subsection (3) covers instances in which jurisdiction may be predicated upon a single act — the causing of injury in the state.
The state’s long-arm statute was accorded the full constitutional effect allowed by International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), in Abbott G. M. Diesel, Inc. v. Piper Aircraft, Utah, 578 P.2d 850 (1978). The Court stated, echoing the language of the statute, “that this state’s jurisdictional standards should not be more restrictive than those allowed by federal due process limitations.” Id. at 853. Although subsections (1), (2) and (3) of the long-arm statute were claimed as a basis for jurisdiction, the Court in Abbott focused on subsection (1), the “transaction of any business” provision. Abbott was remanded for. a determination as to whether the requisite minimal contacts existed on which to base jurisdiction.
*250This Court in several cases has found an insufficient basis for establishing jurisdiction over an out-of-state defendant under subsection (3). These cases are distinguishable. Financial injury to a Utah plaintiff from an alleged out-of-state conversion was alleged as the basis for jurisdiction in Hydroswift Corp. v. Louie’s Boats & Motors, Inc., 27 Utah 2d 233, 494 P.2d 532 (1972). The tortious act complained of occurred in Oregon, and the Court properly concluded that jurisdiction could not be predicated upon the fact that the financial injury occurred in Utah because that was where the plaintiff was located. Acceptance of such a theory would lead to the unacceptable proposition that jurisdiction could be established anywhere a plaintiff might locate. As the United States Supreme Court indicated in International Shoe v. Washington, supra, and more recently in World-Wide Volkswagen Corp. v. Woodson, supra, state boundary lines are not entirely irrelevant to issues of state in personam jurisdiction.
In Pelligrini v. Sachs and Sons, Utah, 522 P.2d 704 (1974), a Utah plaintiff had purchased an automobile from a California dealer while she was a California resident. She subsequently moved to Utah and brought suit here against the dealer for injuries occurring in Utah that allegedly resulted from mechanical defects in the car. This Court affirmed the lower court’s dismissal for want of jurisdiction. The Court’s decision was predicated on two grounds. First, it was unfair to subject a dealer to long-arm jurisdiction because it had no control over where its products might be transported. Second, the defendant or an agent must be “engaged in some substantial activity which constitutes a purposeful minimum contact with this state.” Unlike a manufacturer or a dealer marketing on a multis-tate basis, there was no indication that the defendant sold similar products in Utah or any state other than California. The Court stated that “proper safeguards of the rights of both parties require that jurisdiction should not be predicated solely on the ground that an article sold elsewhere by a dealer may be brought into the state and cause harm.” Id. at 707. In the context of the facts of that case, the ruling, in my view, could hardly have been otherwise.
In Kocha v. Gibson Products Co., Utah, 535 P.2d 680 (1975), the Texas defendant, a third-party defendant, did not sell its products to any business in Utah. The opinion does not indicate how the product which was allegedly defective was brought into the State. This Court affirmed the dismissal based on lack of jurisdiction and simply observed that the Texas third-party defendant had no “minimal contacts” with this State and was not engaged in the transaction of any business in Utah.
Necessarily, the due process limitations on state jurisdiction are flexible. The expansion of state in personam jurisdiction reflects the vast changes which have taken place in the nation’s economy, particularly with respect to nationwide and multistate distribution of goods. Still, small merchants whose consumer products are intended primarily for consumption or use in a limited market area ought not to be subject to a foreign jurisdiction outside the market area when the vendor had no reasonable expectation that his products might be transported. The vendor in such a situation stands on stronger grounds in objecting to litigating a dispute in a foreign forum because of the lack of expectation and the impracticability of having to defend a suit anywhere one might be filed. A manufacturer of goods distributed nationally, either directly or through independent distributors, is in a different position with regard to the fairness of having to defend in different states, as is a wholesaler or jobber selling to distributors located in different states. Large nationwide or multistate businesses, which make great efforts to sell their products to as broad a population as possible, purposefully make use of the free channels of commerce and should be held accountable for legal actions arising out of their use of the nation’s channels of commerce.
In World-Wide Volkswagen Corporation v. Woodson, supra, the United States Supreme Court held that a product liability action could not be instituted in Oklahoma against a New York retailer and a wholesal*251er of an allegedly defective automobile. The Court held that numerous factors must be weighed in determining the fairness of showing a non-resident defendant in a product liability case. The Court stated:
The relationship between the defendant and the forum must be such that it is “reasonable ... to require the corporation to defend the particular suit which is brought there.” 326 U.S., at 317, [66 S.Ct. 154, at 158]. Implicit in this emphasis on reasonableness is the understanding that the burden on the defendant, while always a primary concern, will in an appropriate case be considered in light of other relevant factors, including the forum State’s interest in adjudicating the dispute, see McGee v. International Life Ins. Co., 355 U.S. 220, 223, [78 S.Ct. 199, 201, 2 L.Ed.2d 223] (1957); the plaintiff’s interest in obtaining convenient and effective relief, see Kulko v. Superior Court, supra, [436 U.S. 84] at 92, [98 S.Ct. 1690, 56 L.Ed.2d 132] at least when that interest is not adequately protected by the plaintiff’s power to choose the forum, cf. Shaffer v. Heitner, 433 U.S. 186, 211, n. 37, [97 S.Ct. 2569, 2583, n. 37, 53 L.Ed.2d 683] (1977); the interstate judicial system’s interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies, see Kulko v. Superior Court, supra, [436 U.S.] at 93, 98 [, 98 S.Ct. at 1697, 1700], [- U.S. at -, 100 S.Ct. at 564.]
This case fits within the standards laid out in World-Wide. The out-of-state defendant, Pacific Hydro, sold directly to the plaintiff a costly and substantial piece of allegedly defective industrial equipment that malfunctioned and allegedly resulted in damages to plaintiff. It was contemplated by the parties that the rig would be used in several states, including Utah.
In addition to the tortious injury within the state, other factors support the fairness of requiring defendant Pacific Hydro to defend the cause of action in Utah. Necessary witnesses are likely to be within this forum. The equipment which is the subject of this suit is largely industrial equipment intended to be sold for use in states other than the home forum of Pacific Hydro. It is not akin to the consumer-type articles sold by small retailers or distributors basically in a local trade area. Although its distribution territory is not nationwide, it is alleged that defendant made sales to customers in several states, including Utah. Pacific Hydro knew that the equipment would be used in this State and could reasonably have foreseen that malfunctioning of the equipment could occur here. Pacific Hydro could have taken appropriate measures to protect itself from a suit, had it desired to do so. Pacific Hydro sent representatives to Utah in connection with its responsibilities relating to the malfunctioning of the drilling rig. These facts suggest it is not burdensome or otherwise unfair for the defendant to be required to appear here.
This State has an interest in providing redress for a Utah plaintiff whenever con- . stitutionally permissible as directed by the long-arm statute. California, the home state of Pacific Hydro, has no more substantial interest in this litigation or contacts with the injury and the parties than Utah and would not be a more fair forum for all parties. Furthermore, the co-defendant manufacturer, Portadrill, has appeared in Utah to respond to plaintiff’s claim. It is not in the interest of the efficient administration of justice to force the plaintiff to file a separate action in another state against the distributor where many, if not all, of the same facts would be the subject of relitigation.
The conclusion reached in this case is also in harmony with two decisions of the United States District Court for the District of Utah. In Mountain States Sports, Inc. v. Sharman, 353 F.Supp. 613 (D.Utah 1972), the court sustained jurisdiction under § 78-27-24(3) in a case in which all critical events occurred outside the state, but the tortious injury had a foreseeable impact in Utah. In Engineered Sports Products v. Brunswick Corp., 362 F.Supp. 722 (D.Utah *2521973), the contacts upon which jurisdiction was based included financial loss in the forum and the foreseeability of the injury based on defendant’s knowledge that the product involved would be sold in the forum as a result of defendant’s merchandising endeavors.
In sum, jurisdiction can and should be founded on § 78-27-24(3).

. Hanson involved Florida’s attempt to assert personal jurisdiction over a Delaware trustee whose limited contact with Florida was entirely fortuitous, the settlor of the trust having moved to Florida years after creating the trust. The Supreme Court rejected the extension of long-arm jurisdiction in such circumstances. Hanson held that “there [must] be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” [357 U.S. at 253, 78 S.Ct. at 1240.]