Harry and David, an Oregon Corporation v. J&P Acquisition, Inc. et al

Filing 28

Findings & Recommendation: Defendants Hachenberger's motion to dismiss 19 should be granted. The complaint against Donald and Glenda Hachenberger should be dismissed without prejudice. The Court should grant leave for Plaintiff to refile aga inst Defendants Hachenberger in the state of Delaware. Please access entire text by document number hyperlink. Objections to the Findings and Recommendation are due by 12/11/2009. If objections are filed, any responses to the objections are due 10 days after the objections are filed. Ordered and signed on 11/20/09 by Magistrate Judge Mark D. Clarke. (jw)

FIlED'09 NOV 20 16:34I.JSDC·ORt"!

I N T H E UNITED STATES DISTRICT C O U R T

F O R T H E DISTRICT O F O R E G O N

HARRY AND DAVID, an Oregon corporation Case N u m b e r C V 0 9 - 3 0 5 6 - C L Plaintiff,

v.

REPORT & R E C O M M E N D A T I O N
J & P A C Q U I S I T I O N , a D e l a w a r e corporation, D O N A L D H A C H E N B E R G E R , and GLENDA HACHENBERGER Defendants.

Clarke, M a g i s t r a t e Judge: P l a i n t i f f H a r r y a n d D a v i d ( " P l a i n t i f f ' ) , a n O r e g o n c o r p o r a t i o n , filed a c o m p l a i n t a g a i n s t D e f e n d a n t s J & P Acquisition, a D e l a w a r e corporation, D o n a l d Hachenberger, a F l o r i d a resident, and G l e n d a H a c h e n b e r g e r , a F l o r i d a resident, for b r e a c h o f contract, a p r o m i s s o r y n o t e , a n d p e r s o n a l guaranties. Defendants D o n a l d Hachenberger and Glenda Hachenberger ("Defendants H a c h e n b e r g e r " ) filed a m o t i o n asking t h e court to dismiss P l a i n t i f f s c o m p l a i n t for lack o f p e r s o n a l j u r i s d i c t i o n . In t h e alternative, t h e y s e e k d i s m i s s a l o r t r a n s f e r o f t h e a c t i o n t o D e l a w a r e w h e r e t h e y c o n t e n d j u r i s d i c t i o n a n d v e n u e are p r o p e r . ( D e f e n d a n t s D o n a l d H a c h e n b e r g e r ' s a n d

Report & Recommendation 1

Glenda Hachenberger's Mot. to Dismiss for Lack o f Personal Jurisdiction and for Improper Venue ("Defs.' Mot. to Dismiss") 2.) F o r the reasons set forth below, the Court recommends granting Defendants Hachenberger's motion to dismiss without prejudice, with leave to re-file against Defendants Hachenberger in Delaware where the valid choice o f law clause in the Purchase and Sale A g r e e m e n t specifies.

I.

Factual Background
O n or about March 30, 2007, J&P Acquisition, Inc. ("J&P") purchased from P l a i n t i f f the

company Jackson and Perkins Wholesale, Inc. ("Jackson and Perkins"). Various agreements were executed, including a Purchase and Sale Agreement ("Purchase Agreement"), at least one P r o m i s s o r y N o t e , and a S u p p l y Agreement. The Purchase Agreement was consummated in Jackson County, Oregon. ( P l . ' s Resp. to Mot. To Dismiss ( " P l . ' s Resp.") 3.) Glenda and Donald Hachenberger signed this agreement as guarantors. (Defs.' Mot. to Dismiss 6.) Both Glenda and Donald Hachenberger signed the Purchase Agreement when they were physically located outside the state o f Oregon. (Decl. o f Donald Hachenberger, ~ 3-6; Decl. o f Glenda Hachenberger, ~ 6.) Donald Hachenberger traveled to the state o f Oregon in his corporate capacity to discharge his duties as an officer o f J&P. (Defs.' Mot. To Dismiss 6.) The business transaction was negotiated and closed in N e w York City, NY, at the offices o f Jones Day. (Defs.' Reply 5.) T h e P u r c h a s e A g r e e m e n t contains a choice o f law p r o v i s i o n i n w h i c h t h e p a r t i e s a g r e e d to jurisdiction in the state o f Delaware: All questions concerning the construction, validity and interpretation o f this Report & Recommendation 2

Agreement will be governed b y and construed in accordance w i t h the domestic laws o f the State o f Delaware, without giving any effect to any choice o f l a w o r c o n f l i c t o f l a w provision. E a c h o f t h e Parties submit to the exclusive jurisdiction o f any Federal o r state c o u r t s i t t i n g i n t h e C i t y o f Wilmington, Delaware, in a n y a c t i o n o r p r o c e e d i n g arising out o f o r relating to this Agreement or the transactions contemplated herein and agrees that all claims in respect o f such action o r proceeding m a y b e h e a r d a n d d e t e r m i n e d i n a n y s u c h court. E a c h o f t h e P a r t i e s w a i v e s a n y d e f e n s e o f inconvenient forum to the maintenance o f any action o r proceeding so brought a n d w a i v e s a n y b o n d , surety o r o t h e r security that m i g h t b e r e q u i r e d o f any o t h e r P a r t y w i t h r e s p e c t thereto. (Deci. O f Donald Hachenberger, Exhibit 1 ("Purchase Agreement"), Sections 11.9 - 10.) William H. Williams signed this agreement on b e h a l f Sellers o f Harry & D a v i d Operations Corporation, as President, and CEO and o n b e h a l f o f Bear Creek Direct Marketing, Inc., as P r e s i d e n t a n d C . E . O . C h a r l e s F o x s i g n e d this a g r e e m e n t o n b e h a l f o f t h e P u r c h a s e r , J & P Acquisition, Inc., as President. Donald and Glenda Hachenberger signed the agreement as g u a r a n t o r s . ( P u r c h a s e A g r e e m e n t 70-72.) O n April 10, 2007, P l a i n t i f f and J &P executed a Promissory Note and a Supply Agreement. N e i t h e r D o n a l d n o r G l e n d a Hachenberger were signatories o n t h e s e d o c u m e n t s . T h e P r o m i s s o r y N o t e stated, The C o m p a n y submits to the exclusive jurisdiction o f any Federal o r state court sitting i n Jackson County, Oregon. In any action o r proceeding arising out o f o r relating to this Note and agrees that all claims in respect o f such action o r p r o c e e d i n g m a y b e h e a r d a n d d e t e r m i n e d i n a n y s u c h Court. T h e C o m p a n y waives any defense o f inconvenient forum to the maintenance o f any action o r proceeding so brought and waives any bond, surety o r other security that might b e r e q u i r e d o f t h e P a y e e w i t h r e s p e c t thereto. (CompI., Ex. A ("Senior Promissory Note"), 4.) Charles Fox signed this note. T h e S u p p l y A g r e e m e n t also h a d a g o v e r n i n g l a w p r o v i s i o n :

Report & Recommendation 3

This Agreement w i l l b e construed in accordance w i t h federal law and, to t h e e x t e n t n o t i n c o n s i s t e n t thereto, w i t h the laws o f t h e c o u r t s i n the j u r i s d i c t i o n o f t h e principal place o f business o f the non-moving party, without regard to a n y c h o i c e o f l a w p r o v i s i o n s . E a c h P a r t y and e a c h A f f i l i a t e o f e a c h P a r t y h e r e b y s u b m i t s i t s e l f for t h e s o l e p u r p o s e o f t h e A g r e e m e n t a n d a n y c o n t r o v e r s y a r i s i n g h e r e u n d e r to t h e j u r i s d i c t i o n o f t h e c o u r t s o f t h e j u r i s d i c t i o n o f t h e p r i n c i p a l p l a c e o f b u s i n e s s o f t h e n o n - m o v i n g p a r t y a n d w a i v e s a n y o b j e c t i o n to t h e g r o u n d s o f l a c k i n j u r i s d i c t i o n ( f o r u m n o n - c o n v e n i e n s o r o t h e r w i s e ) to t h e e x e r c i s e o f s u c h j u r i s d i c t i o n o v e r i t b y a n y s u c h courts. (Am. C o m p I . , E x . B ( " S u p p l y A g r e e m e n t " ) , S e c t i o n 5.5.) C h a r l e s F o x s i g n e d t h i s a g r e e m e n t o n b e h a l f o f J & P Acquisition, Inc., as President, and Steven V. O'Connell signed as C F O o f H a r r y & D a v i d Operations Corporation. (Supply Agreement 11.) A t t h e t i m e t h e agreements w e r e consummated, J&P h a d offices i n P l a i n t i f f s c o r p o r a t e o f f i c e b u i l d i n g l o c a t e d i n M e d f o r d , Oregon, and h a d b e e n o c c u p y i n g t h o s e o f f i c e s f o r m o r e t h a n a year. J & P continues to maintain offices and employees i n Jackson County, Oregon. ( P I . ' s Resp.3.) P l a i n t i f f filed i t s c o m p l a i n t a g a i n s t D e f e n d a n t s J & P a n d D o n a l d a n d G l e n d a H a c h e n b e r g e r o n J u n e 1 8 , 2 0 0 9 , c l a i m i n g that the p a r t i e s b r e a c h e d t h e i r o b l i g a t i o n s u n d e r t h e promissory notes. (Compi. 1.) (Am. Compi. 1.) P l a i n t i f f t h e n f i l e d a n a m e n d e d c o m p l a i n t o n J u l y 16, 2 0 0 9 .

II.

L e g a l Standards
T o d e t e r m i n e w h e t h e r p e r s o n a l j u r i s d i c t i o n exists, t h e c o u r t m a y c o n s i d e r t h e p l e a d i n g s

a n d e v i d e n c e p r e s e n t e d t h r o u g h a f f i d a v i t s , a n d m a y a l s o o r d e r l i m i t e d d i s c o v e r y to d e v e l o p jurisdictional facts. D o e v. Unocal Corp., 248 F.3d 915, 922 (9th Cir.2001); D a t a Disc. Inc. v. Sys. Tech. Assoc., 557 F . 2 d 1280, 1285 (9th Cir.1977). P l a i n t i f f b e a r s the b u r d e n o f e s t a b l i s h i n g t h a t this c o u r t has p e r s o n a l j u r i s d i c t i o n o v e r Report & Recommendation 4

defendant. See Fireman's Fund Ins. Co. v. Nat'l Bank o f Coop., 103 F.3d 8 8 8 , 8 9 3 (9th Cir.1996) ( n o n m o v i n g p a r t y has b u r d e n o f establishing personal jurisdiction). P l a i n t i f f n e e d o n l y m a k e a

p r i m a j a c i e showing o f facts that support exercising jurisdiction over defendants. Tuazon v. R.J.
Reynolds Tobacco Co., 433 F.3d 1163, 1168 (9th Cir.2006). Personal jurisdiction over a non-resident defendant is tested under a two-prong analysis: the exercise o f jurisdiction must (1) satisfy the requirements o f the long arm statute o f the state i n which the district court sits; and (2) comport with principles o f federal due process. Terracom v. Valley Nat. Bank, 49 F.3d 5 5 5 , 5 5 9 (9th Cir.1995); Ziegler v. Indian River Cty., 64 F.3d 470, 473 (9th Cir.1995). Regarding the first prong, the applicable long-arm statute extends the p o w e r o f Oregon courts to exercise personal jurisdiction to "any action where prosecution o f the action against a defendant i n this state is not inconsistent with the Constitution o f this state o r the Constitution o f t h e United States." Or. R. Civ. P. 4(L). T h e d u e p r o c e s s c l a u s e o f t h e U n i t e d S t a t e s C o n s t i t u t i o n p r o t e c t s p e r s o n s from b e i n g subject to the binding judgments o f a forum with which they have "established no meaningful contacts, ties, o r relations." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (citing Int'l Shoe Co. v. State o f Washington, 326 U.S. 310, 319 (1945)). D u e process requires t h a t a d e f e n d a n t h a v e " m i n i m u m c o n t a c t s w i t h t h e forum s t a t e s u c h t h a t t h e e x e r c i s e o f p e r s o n a l j u r i s d i c t i o n does n o t offend traditional notions o f fair play and substantial j u s t i c e . " D e c k e r Coal Co. v. Commonwealth Edison Co., 805 F.2d 8 3 4 , 8 3 9 (9th Cir.1986) (citing Int'l Shoe Co., 326 U.S. at 316). M i n i m u m contacts encompasses two types o f jurisdiction: general and specific. See Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir.1990). F o r a defendant to be subject to general personal jurisdiction, the defendant m u s t have Report & Recommendation 5

such "continuous and systematic contacts with the forum that the exercise o f j u r i s d i c t i o n does not offend traditional notions o f fair play and substantial j u s t i c e . " Reebok Intern. Ltd. v. McLaughlin, 49 F.3d 1 3 8 7 , 1 3 9 1 (9th Cir.1995). The standard for general jurisdiction is high, requiring that the contacts i n the forum "approximate physical presence." Tuazon, 42 F.3d at 1169. Alternatively, specific personal jurisdiction exists where: (1) the defendant has performed s o m e a c t o r c o n s u m m a t e d s o m e t r a n s a c t i o n w i t h i n t h e forum o r o t h e r w i s e p u r p o s e f u l l y a v a i l e d h i m s e l f o r h e r s e l f o f the privileges o f conducting activities i n the forum; (2) the claim arises out of, or results from, the defendant's forum-related activities; and (3) the exercise o f j u r i s d i c t i o n is reasonable. Bancroft & Masters, Inc. v. Augusta National Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). Purposeful availment requirement is satisfied " i f the defendant has taken deliberate action within the forum state o r i f h e has created continued obligations to forum residents." Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995.) l f t h e p l a i n t i f f meets the first and second elements, the burden shifts to the defendant to present a compelling case that the exercise o f j u r i s d i c t i o n would be unreasonable. Schwarzenegger v. Fred Martin M o t o r Co., 3 7 4 F.3d 797, 802 (9th Cir.2004) (citing Burger King, 471 U.S. at 476-78)). In analyzing whether a defendant purposefully availed h i m s e l f to a forum, the N i n t h Circuit has used the " C a l d e r effects test." Schwarzenegger, 374 F.3d at 803. In the " C a l d e r effects test" p l a i n t i f f must demonstrate that defendant (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that defendant knows is likely to b e suffered in the forum state. Schwarzenegger, 374 F.3d at 803 (citing Calder v. Jones, 465 U.S. 783 (1984)). Report & R e c o m m e n d a t i o n 6

III.

C o u r t D o e s N o t H a v e P e r s o n a l J u r i s d i c t i o n Over D e f e n d a n t s
Defendants Hachenberger filed this motion to dismiss arguing that the Court does n o t

have personal jurisdiction. They argue that P l a i n t i f f has failed to m a k e a p r i m a f a c i e showing i n its complaint that personal jurisdiction over Defendants Hachenberger is p r o p e r and that there is no evidence o n record o f contact with Oregon to support being haled into court. Defendants Hachenberger ask the Court to dismiss the action against them without allowing P l a i n t i f f to amend its complaint. (Defs.' Mot. to Dismiss 5.)

A.

No General Personal Jurisdiction

D e f e n d a n t s H a c h e n b e r g e r a r g u e t h a t t h e r e are n o m i n i m u m c o n t a c t s b e t w e e n D o n a l d a n d Glenda Hachenberger and the state o f Oregon to comport with the requirements o f due process. T h e y contend that they cannot be haled into court in their personal capacities. (Defs.' Mot. to Dismiss 5.) P l a i n t i f f asserts that there are minimum contacts because o f the Defendants' conduct: "[b]ecause 1) the company's contacts with the state o f Oregon were substantial, 2) D o n a l d Hachenberger h a d personal contacts with the state o f Oregon, and 3) the personal guarantees were non-negotiable conditions to [Plaintiff] entering the Agreement, personal j u r i s d i c t i o n is a p p r o p r i a t e . " ( P l . ' s Resp. 3 - 4 . ) P l a i n t i f f asserts five facts: 1. The Purchase and Sale Agreement was consummated in Jackson County, Oregon. 2. J&P Acquisition had offices in plaintiffs corporate office building i n Medford and was occupying those offices for more than a year. 3. J&P h a d approximately 30 employees between the time period o f April, 2007 a n d A u g u s t , 2008. 4. Donald Hachenberger came to Oregon to perform due diligence investigations Report & Recommendation 7

prior to the sale. 5. J&P Acquisition maintains offices and has employees i n Jackson county to this very day. (Pl.'s Resp. 3.) J&P has conceded to jurisdiction in Oregon. (Defs.' Reply 9.) While Defendants Hachenberger do n o t dispute that Donald Hachenberger traveled to Oregon o n one occasion to discharge his duties as an officer o f J&P, they argue that this visit does not establish sufficient c o n t a c t s for g e n e r a l p e r s o n a l j u r i s d i c t i o n b e c a u s e i t w a s n o t d o n e i n h i s p e r s o n a l c a p a c i t y . (Def.'s Mot. to Dismiss 6.) See MatteI, Inc. v. Greiner and Hausser GMBH, 354 F.3d 8 5 7 , 8 6 3 (9th Cir. 2003). A single visit on Donald Hachenberger's part, i n his corporate capacity, is n o t enough to m e e t t h e h i g h s t a n d a r d for g e n e r a l p e r s o n a l j u r i s d i c t i o n . D o n a l d H a c h e n b e r g e r t r a v e l e d t o Oregon as an officer and director o f J&P on one occasion prior to the purchase o f Jackson and Perkins "to discharge [his] duties in [his] official corporate capacity." (Decl. Donald Hachenberger -,r 7.) Defendants Hachenberger assert i n their declarations that they have no connection to Oregon b y pointing out their state residency is Florida, they o w n no Oregon p r o p e r t y , a n d t h e y h a v e n o g e n e r a l b u s i n e s s o r f i n a n c i a l o b l i g a t i o n s i n t h e state. ( S e e D e c l . o f Glenda Hachenberger -,r-,r 8-18 and Decl. o f Donald Hachenberger -,r-,r 8-19.) While P l a i n t i f f a r g u e s t h e r e " c o n t i n u o u s a n d s y s t e m a t i c " c o n t a c t s w i t h Oregon, H e l i c o p t e r o s N a c i o n a l e s d e Columbia, S.A. v. Hall, 466 U.S. 408, 415 (1984), from the facts alleged, the Court cannot c o n c l u d e t h e c o n t a c t s i n t h e f o r u m " a p p r o x i m a t e p h y s i c a l p r e s e n c e " for D e f e n d a n t s Hachenberger. See Tuazon, 42 F.3d at 1169.

Report & Recommendation 8

B.

N o Specific Personal Jurisdiction

D e f e n d a n t s H a c h e n b e r g e r also argue t h a t t h e C o u r t d o e s n o t h a v e s p e c i f i c p e r s o n a l j u r i s d i c t i o n o v e r them. (Defs.' Mot. to Dismiss 8.) T h e y argue that t h e y h a v e n o t acted w i t h i n the forum to p u r p o s e f u l l y availed themselves o f Oregon law, that t h e y h a v e no forum-related a c t i v i t i e s t h a t are r e l a t e d to t h e b r e a c h o f o b l i g a t i o n s at i s s u e here, a n d t h a t t h e e x e r c i s e o f j u r i s d i c t i o n w o u l d b e unreasonable. See MatteI, 354 F . 3 d at 863 ("(1) the defendant has p e r f o r m e d s o m e act o r c o n s u m m a t e d s o m e transaction w i t h i n t h e forum o r o t h e r w i s e p u r p o s e f u l l y a v a i l e d h i m s e l f o f t h e p r i v i l e g e s o f c o n d u c t i n g a c t i v i t i e s i n t h e forum, (2) t h e c l a i m a r i s e s o u t o f o r r e s u l t s from t h e d e f e n d a n t ' s f o r u m - r e l a t e d a c t i v i t i e s , a n d (3) t h e e x e r c i s e o f j u r i s d i c t i o n is reasonable. ") Plaintiff, however, argues that Defendants Hachenberger's actions o f p e r s o n a l guaranties and involvement i n the purchase o f J & P h a v e availed t h e m to Oregon. P l a i n t i f f argues that D e f e n d a n t D o n a l d Hachenberger's visit to Oregon c a n n o t b e o v e r l o o k e d as s i m p l y a c o r p o r a t e a c t i o n . (PI.'s R e s p . 4 . ) P l a i n t i f f cites O r e g o n S u p r e m e C o u r t case l a w i n w h i c h t h e c o u r t found t h a t p e r s o n a l g u a r a n t i e s c a n s a t i s f y t h e s t a n d a r d s for due p r o c e s s a n d e s t a b l i s h p e r s o n a l j u r i s d i c t i o n . I n S t a t e o f O r e g o n e x reI. W a r e v. Hieber, the court concluded [fJrom t h e s t a n d p o i n t o f 'fairness' to t h e p a r t i e s a n d c o n v e n i e n c e to t h e p a r t i e s a n d f r o m t h e s t a n d p o i n t o f t h e i n t e r e s t s o f t h e S t a t e o f O r e g o n , w e are o f t h e o p i n i o n t h a t t h e p e r s o n a l g u a r a n t y o f t h e W a r e s m u s t b e c o n s i d e r e d as o n e a s p e c t o f t h e e n t i r e c o u r s e o f b u s i n e s s b e t w e e n K e l l e r Enterprises and B l a c k D i a m o n d . 515 P . 2 d 721, 724-25 (Or. 1973). I n Hieber, the guaranty agreement signed b y the W a r e s w a s e s s e n t i a l t o t h e c o n t i n u a t i o n o f t h e b u s i n e s s r e l a t i o n s h i p . Mr. W a r e t r a v e l e d t o O r e g o n t o c o m m e n c e t h e contractual relationship and physically transported t h e products o f t h e s a l e from

Report & Recommendation 9

Oregon to California. Id. at 724. The court later qualified its ruling in the similar case o f State ex reI. Sweere v Crookham, 609 P.2d 361 (Or. 1980). There, the court explained that the Hieber court "held it would b e proper to 'pierce the veil' b y imputing contacts between Oregon and the corporation to the Wares." Id. at 364. I t further qualified that the contacts between the forum state and the foreign corporation's guarantor's "must be limited to circumstances in which the g u a r a n t y p l a y s a m o r e integral p a r t i n c a u s i n g o r p r o m o t i n g s i g n i f i c a n t e c o n o m i c c o n s e q u e n c e s in Oregon." Id. In Crookham, the court ultimately determined that Oregon did not have personal jurisdiction over the out-of-state relator, concluding that it was unfair to impute his company's contacts with the state o f Oregon to him where he as the relator had no control or interest in the company. Id. at 10. Here, P l a i n t i f f argues that there is jurisdiction because Defendants Hachenberger executed personal guaranties on the Purchase Agreement: "the personal guarantee demonstrates that he was conducting due diligence prior to the sale for his personal benefit and Glenda Hachenberger's personal benefit as well as the corporate benefit. The personal guarantees, which were an essential element o f t h e sale, give Oregon jurisdiction over both defendants." (PI.'s Resp.4.) However, these personal guaranties on the Purchase Agreement do not warrant personal jurisdiction given all o f the circumstances. The fiduciary shield doctrine does apply to Defendant Donald Hachenberger. "A corporate officer who has contact with a forum only in the performance o f his official duties is not subject to the personal jurisdiction o f the courts in that forum." Sidco Industries, Inc. v. Wimar Tahoe Corp., 768 F.Supp. 1343, 1349 (D. Or. 1991). The circumstances do not warrant "piercing the corporate veil" as Plaintiff contends. Report & Recommendation 10

The circumstances here are unlike Hieber, where the court found jurisdiction and summarized, "Mr. Ware h a d not found it inconvenient to come to Oregon to commence the c o n t r a c t u a l r e l a t i o n s h i p w i t h B l a c k D i a m o n d . I t s h o u l d b e n o m o r e i n c o n v e n i e n t for h i m t o come to Oregon to litigate the controversy attending the termination o f the relationship." Hieber, 515 P .2d at 725. The guarantor traveled to Oregon not only to sign the agreement b u t also to transport products for his o w n business use from Oregon to California. I n c o n t r a s t , t h e P u r c h a s e A g r e e m e n t did n o t b e g i n and e n d in Oregon. I t w a s c o n s u m m a t e d i n O r e g o n , n e g o t i a t e d a n d c l o s e d i n N e w York, s i g n e d b y D e f e n d a n t D o n a l d H a c h e n b e r g e r i n Florida, and signed b y D e f e n d a n t G l e n d a H a c h e n b e r g e r i n Colorado. (Pl.'s Response 3; Defs.' R e p l y 5, Decl. o f Donald Hachenberger~ 6; and Decl. o f Glenda Hachenberger ~ 6.) Defendant Donald Hachenberger asserted, "I traveled to Oregon o n one occasion p r i o r to the purchase o f Jackson and Perkins to discharge m y duties i n m y official corporate capacity." (Decl. o f Donald Hachenberger ~ 7.) And, as will be discussed below, the parties negotiated and agreed to Delaware as the jurisdiction, should conflicts arise. T h e c o n t a c t s j u s t i f y i n g j u r i s d i c t i o n i n H i e b e r are t h u s d i s t i n g u i s h a b l e f r o m t h e c o n t a c t s here. G i v e n t h e t o t a l i t y o f t h e c i r c u m s t a n c e s and t h e n a t u r e o f t h e c o n t a c t s , p e r s o n a l j u r i s d i c t i o n o v e r D e f e n d a n t s H a c h e n b e r g e r w o u l d b e unreasonable.
IV. D e f e n d a n t s H a c h e n b e r g e r A g r e e d t o D e l a w a r e as t h e A p p r o p r i a t e F o r u m

T h e r e a r e at l e a s t t h r e e a g r e e m e n t s t h a t w e r e c o n s u m m a t e d i n t h e p u r c h a s e a n d s a l e o f J a c k s o n a n d Perkins. E a c h agreement contains a different c h o i c e o f l a w provision. T h e P u r c h a s e A g r e e m e n t d e s i g n a t e s D e l a w a r e , the P r o m i s s o r y N o t e d e s i g n a t e s J a c k s o n C o u n t y , O r e g o n , a n d t h e S u p p l y A g r e e m e n t d e s i g n a t e s the p r i n c i p a l p l a c e o f b u s i n e s s o f t h e n o n - m o v i n g party. Report & Recommendation 11

Plaintiff argues that the three agreements should be read as a whole because t h e y were executed at the same time. Oregon case law provides, "[w ]hen parties contemporaneously execute multiple agreements that address interrelated subjects, we are b o u n d to construe t h e m together as one contract to discern the parties' intent." Snow Mountain Pine, Ltd. v. Tecton Laminate Corp., 869 P . 2 d 3 6 9 , 3 7 2 (Or. App. 1993) (citing Hays v. Hug, 412 P.2d 3 7 3 , 3 7 4 (Or. 1966). The court employs this analysis when agreements were m a d e at about the same time, b y the same parties, and as a part o f the same transaction. Hays, 412 P.2d at 374. P l a i n t i f f f u r t h e r argues, "the forum s e l e c t i o n c l a u s e i n t h e P r o m i s s o r y N o t e a n d t h e Purchase Agreement are in direct conflict and there is no w a y to give effect to b o th documents even though they should b e considered as part o f a single document because they were executed at the same time." I t argues that jurisdiction should be i n Oregon and n o t Delaware so as n o t to "contravene a strong public policy that all issues central to the matter be resolved i n the jurisdiction where the action is pending." (Pl.'s Resp. 5.) See Richards v. Lloyds o f London, 135 F.3d 1289, 1294 (9th Cir. 1984) (Supreme Court identified three grounds for repudiating a forum selection clause: (1) clause was included due to fraud o r overreaching, (2) i f the p a r t y wishing to r e p u d i a t e t h e c l a u s e w o u l d b e d e p r i v e d o f h i s d a y i n c o u r t w e r e t h e c l a u s e e n f o r c e d , a n d (3) i f e n f o r c e m e n t o f the clause w o u l d contravene w i t h a strong p u b l i c p o l i c y o f the forum i n w h i c h suit is brought.) P l a i n t i f f asserts that Harry and David's decision to proceed with the sale was contingent o n the guaranties o f Defendants. S e n i o r V i c e P r e s i d e n t and General C o u n s e l R o b e r t B l u t h declared,

Report & Recommendation 12

I w a s i n v o l v e d o n b e h a l f o f H a r r y and D a v i d in n e g o t i a t i n g a p u r c h a s e a g r e e m e n t w i t h J & P A c q u i s i t i o n , Inc., i n c l u d i n g t h e P r o m i s s o r y N o t e a n d t h e r e l a t e d a n c i l l a r y d o c u m e n t s a n d agreement. T h e e x e c u t i o n o f p e r s o n a l g u a r a n t e e s b y D o n a l d Hachenberger and Glenda Hachenberger were specifically agreed upon as the security for, among other things, payment on the Promissory Note and were an essential condition to p l a i n t i f f i n entering into the agreement to sale to J &P Acquisition. H a d the Hachenbergers refused to personally guarantee the Purchase Agreement o r offer other security acceptable to Harry and David, Harry and D a v i d w o u l d n o t h a v e e n t e r e d i n t o the P u r c h a s e A g r e e m e n t . (Dec!. o f Robert B l u t h 2.) The three agreements, however, cannot be read as a whole in these circumstances because the parties to the agreement are n o t the same. The Purchaser and Seller remain the same throughout, b u t the Defendants as Guarantors only signed the Purchase Agreement. The P u r c h a s e A g r e e m e n t w a s s i g n e d i n M a r c h 2 0 0 7 and t h e P r o m i s s o r y N o t e a n d S u p p l y A g r e e m e n t w e r e s i g n e d i n A p r i l 2007. P l a i n t i f f s argue t h a t t h e D e f e n d a n t s H a c h e n b e r g e r ' s g u a r a n t i e s o n t h e P u r c h a s e Agreement was essential to Harry and David's decision to see Jackson and Perkins to J&P. I t concludes that all agreements should b e treated as one, but its rationale is confusing and n o t well taken. P l a i n t i f f ' s complaint attached only the "ancillary agreements" signed b y J&P as a basis for t h e s u i t . I t w a s D e f e n d a n t s H a c h e n b e r g e r w h o s u b m i t t e d t h e P u r c h a s e A g r e e m e n t for t h e Court's review. N o w P l a i n t i f f appears to argue that the guarantors are essential to making the agreement b u t the terms o f the very same agreement designating choice o f law, to w h i c h t h e y all agreed, are not. P l a i n t i f f s argument begs the question that i f the Purchase Agreement w i t h the guaranty was so essential and Oregon jurisdiction is so essential -- as the court assumes because o f the P l a i n t i f f s current pleadings, w h y did all the parties agree to a choice o f law provision designating Delaware.

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Oregon policy favors forum selection clauses that were freely negotiated. See Reeves v. Chern Industrial Co., 494 P.2d 729 (Or. 1972) (finding that Forum selection clauses are favored in Oregon, absent overreaching o r fraud). The evidence shows that the parties freely negotiated the Purchase Agreement to include the forum selection clause for Delaware. Defendants Hachenberger signed as guarantors under the b e l i e f that any lawsuit would be brought i n Delaware. (Dec!. o f Donald Hachenberger ~ 5; Dec!. o f Glenda Hachenberger ~ 5.) P l a i n t i f f has n o t shown that Defendants Hachenberger should be subject to jurisdiction i n O r e g o n b a s e d o n agreements t h a t D e f e n d a n t s H a c h e n b e r g e r h a v e n o t s i g n e d a n d a forum selection to w h i c h they did not negotiate. Defendants Hachenberger have no contacts w i t h Oregon and reside out-of-state. I t is understandable w h y they negotiated to litigate outside o f Oregon. Harry and David is also a Delaware corporation, and it is n o t unreasonable to conclude the Harry and D a v i d would agree to this term.
V. Conclusion

T h e c o m p l a i n t against D e f e n d a n t s Hachenberger should b e d i s m i s s e d w i t h o u t prejudice. Defendants have n o t personally availed themselves to Oregon. Further, the parties executed an agreement with a valid choice o f law provision designating Delaware as the j u r i s d i c t i o n for litigation. T h e c l a i m s a g a i n s t D e f e n d a n t J&P A c q u i s i t i o n r e m a i n unchanged.
VI. Recommendation

Defendants Hachenberger's motion to dismiss (#19) should be granted. The complaint against D o n a l d a n d G l e n d a H a c h e n b e r g e r s h o u l d b e dismissed w i t h o u t prejudice. T h e C o u r t should grant leave for P l a i n t i f f to refile against Defendants Hachenberger i n the state o f Delaware. Report & Recommendation 14

This recommendation is not an order that is immediately appealable to the Ninth Circuit Court o fAppeals. Any notice o f appeal pursuant to Rule 4(a)(I), Federal Rules o f Appellate

Procedure, should not be filed until entry o f the district court's judgment or appealable order.
O b j e c t i o n s to t h i s R e p o r t a n d R e c o m m e n d a t i o n , i f a n y , a r e d u e b y D e c e m b e r 1 1 . 2 0 0 9 . I f objections are filed, any responses to the objections are due within 10 days, s e e Federal R u l e s o f Civil Procedure 72 a n d 6. Failure to timely file objections to any factual determinations o f the

Magistrate Judge will be considered a waiver o f a party's right to de novo consideration o f t h e factual issues and will constitute a waiver o f a party's right to appellate review o f the findings o f fact in an order or judgment entered p~rsuant to the Magistrate Judge's r e c o m / n . D A T E D this

:J!? day o f November, 2 0 0 9 . / / /

M A R K D. CLARKE United States Magistrate Judge

Report & Recommendation 15