Indoor Billboard Northwest, Inc. et al v. M2 Systems Corporation

Filing 27

Opinion and Order: The Court GRANTS Defendant's Motion 7 to Dismiss for Lack of Jurisdiction and DISMISSES this matter for lack of jurisdiction without prejudice. Signed on 02/06/2013 by Judge Anna J. Brown. See attached 27 page Opinion and Order for full text. (bb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

INDOOR BILLBOARD NORTHWEST
INC.; CATHERINE E. COX;
DANIEL D. GESTWICK IRA R/O;
PAIGE C. GIST; BERNICE GOLDIN
IRA by ROCHELLE GOLDIN and
STEVE GOLDIN for BERNICE
GOLDIN ESTATE; DONALD J.
HANDAL REVOCABLE TRUST U/O;
DONALD J. HANDAL IRA R/O;
MARGOT S. HANDAL TR U/A;
EDWARD J. HARTNETT; GEOFFREY
M. HOLMES; GEOFFREY W.
HOLMES; LEE M. and BECKY
HOLZMAN; MARITAL TRUST U/W
WILLIAM KATZ; PEGGY W.
KAUFMANN IRA; RICHARD J.
KAUFMANN DECEDENT'S TRUST;
KAY M. KAZMAIER; STANLEY A.
STAR; JAMES SHU LEVITZ; ALAN
and NADINE WOLFF; and MICHAEL
WOLFF,
Plaintiffs,
v.
M2 SYSTEMS CORPORATION,
Defendant.
1 - OPINION AND ORDER

3:12-CV-01338-BR
OPINION AND ORDER

ARDEN E. SHENKER
Shenker & Bonaparte LLP
1500 S.W. First Avenue
Suite 765
Portland, OR 97201
[phone]
Attorneys for Plaintiffs
TIMOTHY W. SNIDER
Stoel Rives LLP
900 S.W. Fifth Avenue
Suite 2600
Portland, OR 97204
[phone]
Attorneys for Defendant
BROWN, Judge.
This matter comes before the Court on Defendant's Motion
(#7) to Dismiss for Lack of Jurisdiction and Venue or,
Alternatively, Motion to Transfer Venue and Defendant's Motion
(#10) to Dismiss for Failure to State a Claim Upon Which Relief
Can Be Granted.
For the reasons that follow, the Court GRANTS Defendant's
Motion to Dismiss for Lack of Jurisdiction.

BACKGROUND
The following facts are taken from the Complaint and the
parties' materials related to Defendant's Motion to Dismiss for
Lack of Personal Jurisdiction and Venue.
On July 25, 2006, Defendant M2 Systems Corporation entered

2 - OPINION AND ORDER

into a Promissory Note with Matthew Szulik,1 a Connecticut
resident, in which M2 Systems "promise[d] to pay [Szulik] . . .
on April 24, 2007, or sooner as otherwise provided herein (the
Maturity Date), the principal amount of Two Million Fifty
Thousand ($2,050,000) Dollars" plus interest.

Compl. Ex. A at 1.

Also on July 25, 2006, Defendant and Szulik entered into a
Security Agreement relating to the Promissory Note setting out
Szulik's "rights, remedies, and benefits."

On that same day

Defendant and Szulik, among others, entered into an Escrow
Agreement related to the Promissory Note and Security Agreement.
In their Complaint Plaintiffs allege the Promissory Note
"was assigned on February 24, 2009, to a holder in due course2
and assigned by such holder in due course to the plaintiffs on
February 24, 2009, April 1, 2009, and November 6, 2009, as
holders in due course."
On July 24, 2012, Plaintiffs filed an action against
Defendant in this Court alleging a claim for breach of the
Promissory Note.
On September 21, 2012, Defendant filed a Motion to Dismiss
for Lack of Jurisdiction and Venue or, Alternatively, Motion to
Transfer Venue and a Motion to Dismiss for Failure to State a

1

Szulik is not a party to this action.

2

Plaintiffs do not identify in their Complaint who the
holder in due course was in the February 24, 2009, transfer.
3 - OPINION AND ORDER

Claim Upon Which Relief Can Be Granted.
Plaintiffs filed Responses to both Motions on October 26,
2012.

On November 13, 2012, Defendant filed its Replies.
On January 16, 2013, the Court entered an Order directing

Plaintiffs to "provide a record that specifies with particularity
the citizenship of each Plaintiff."
On January 21, 2013, Plaintiffs filed the Declaration of
Amanda Soden in response to the Court's January 16, 2013, Order.
On January 29, 2013, the Court entered an Order noting
Soden's Declaration did not set out sufficient information for
the Court to determine each Plaintiff's citizenship.

The Court,

therefore, directed Plaintiffs to provide the Court with
information as to the domicile and citizenship of each Plaintiff.
On January 31, 2013, Plaintiffs filed a Supplemental
Declaration of Amanda Soden in which Soden testified
[e]ach of the natural plaintiffs is a domiciliary
of the place of that person's residence as set
forth in paragraphs 2 and 3 of my said
declaration. Each of the accounts, trusts and
estates is permanently present in the states
specified in paragraph 3 of my said declaration.
Supplemental Decl. of Amanda Soden at ¶ 2.
The Court took Defendant's Motions under advisement on
January 31, 2013.

4 - OPINION AND ORDER

STANDARDS
I.

Motion to Dismiss for Lack of Personal Jurisdiction
When "the existence of personal jurisdiction is challenged

and the defendant appears specially to contest its presence in
the jurisdiction, the plaintiff has the burden to come forward
with some evidence to establish jurisdiction."

Dist. Council No.

16 of Intern. Union of Painters & Allied Trades, Glaziers,
Architectural Metal & Glass Workers, Local 1621 v. B&B Glass,
Inc., 510 F.3d 851, 855 (9th Cir. 2007)(citing Schwarzenegger v.
Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004)).

"The

court may consider evidence presented in affidavits to assist it
in its determination and may order discovery on the
jurisdictional issues."

Doe v. Unocal Corp., 248 F.3d 915, 922

(9th Cir. 2001)(citing Data Disc, Inc. v. Sys. Tech. Assoc.,
Inc., 557 F.2d 1280, 1285 (9th Cir. 1977)).

If the court makes a

jurisdictional decision based only on pleadings and any
affidavits submitted by the parties and does not conduct an
evidentiary hearing, the plaintiff need make only a prima facie
showing of personal jurisdiction.
(citation omitted).

B&B Glass, 510 F.3d at 855

When determining whether the plaintiff has

met the prima facie showing, the court must assume the truth of
uncontroverted allegations in the complaint.

Ochoa v. J.B.

Martin and Sons Farms, Inc., 287 F.3d 1182, 1187 (9th Cir. 2002).
When the court rules on a defendant's motion to dismiss for
5 - OPINION AND ORDER

lack of personal jurisdiction without holding an evidentiary
hearing, the plaintiff's version of the facts, unless directly
contravened, is taken as true, and the court must resolve factual
conflicts in the parties' affidavits in the plaintiff's favor.
Harris Rutsky & Co. Ins. Serv., Inc. v. Bell & Clements LTD, 328
F.3d 1122, 1129 (9th Cir. 2003).
II.

Motion to Transfer Venue
Under 28 U.S.C. § 1404(a), the district court may transfer

any civil action "[f]or the convenience of the parties and
witnesses, in the interests of justice."

The forum to which

transfer of venue is sought must be a district court where the
case "might have been brought."

Id.

The court has discretion

"to adjudicate motions to transfer according to 'individualized,
case-by-case consideration of convenience and fairness.'"
Stewart Org. v. Ricoh Corp., 487 U.S. 22, 29 (1988)(citation
omitted).

Among the factors the court must balance when

considering a motion to transfer are the plaintiff's choice of
forum, the parties' contacts with the forum, the availability of
compulsory process for unwilling witnesses, the relative ease of
access to sources of proof such as witnesses and documents, and
judicial economy.

See Jones v. GNC Franchising, Inc., 211 F.3d

495, 498-99 (9th Cir. 2000).

The rationale that controversies

should be resolved in the locale where they arise also applies to
judicial review of administrative decisions that are limited to
6 - OPINION AND ORDER

an administrative record.

Trout Unlimited v. U.S. Dep't of

Agric., 944 F. Supp. 13, 19 (D.D.C. 1996).

DEFENDANT'S MOTION (#7) TO DISMISS FOR LACK OF JURISDICTION
AND VENUE OR, ALTERNATIVELY, MOTION TO TRANSFER VENUE
Defendant moves to dismiss this action pursuant to Federal
Rule of Civil Procedure 12(b)(2) on the ground that this Court
lacks personal jurisdiction over Defendant.

Alternatively,

Defendant moves to transfer venue of this matter to the United
States District Court for the Middle District of Florida.
Although Plaintiffs concede this Court lacks general
jurisdiction over Defendant, Plaintiffs, nonetheless, contend
this Court has personal jurisdiction over Defendant because
(1) Defendant consented to this Court's jurisdiction pursuant to
the Promissory Note and/or (2) this Court has specific
jurisdiction.
I.

Plaintiffs have not established Defendant waived its right
to challenge this Court's jurisdiction.
The Promissory Note contains the following forum-selection

clause:
This Note shall be construed and enforced in
accordance with . . . the laws of the State of
Connecticut applicable to contracts made and to be
performed entirely within such State. Maker
hereby waives all right to trial by jury in any
action, suit or proceeding brought to enforce or
defend any rights or remedies under this Note, and
agrees that any lawsuit brought to enforce or
interpret the provisions of this Note shall be
7 - OPINION AND ORDER

instituted in state or federal courts, as
appropriate, in Fairfield County, Connecticut, and
Maker further agrees to submit to the personal
jurisdiction of such court and waives any
objection which it may have, based on improper
venue or forum non conveniens, to the conduct of
any proceeding in any such court . . . . Nothing
contained in this paragraph affects the . . .
right of Payee to bring any action or proceeding
against Maker or its property in the courts of any
other jurisdiction.
Compl., Ex. A at 5-6.

The Security Agreement contains a similar

forum-selection clause:
This Agreement shall be construed and enforced in
accordance with . . . [the] laws of the State of
Connecticut applicable to contracts made and to be
performed entirely within such State. Debtor
. . . hereby waives all right to trial by jury in
any action, suit or proceeding brought to enforce
or defend any rights or remedies under this
Agreement, and agrees that any lawsuit brought to
enforce or interpret the provisions of this
Agreement shall be instituted in state or federal
courts, as appropriate, in Fairfield County,
Connecticut, and it and further agrees to submit
to the personal jurisdiction of such court and
waives any objection which it may have, based on
improper venue or forum non conveniens, to the
conduct of any proceeding in any such court. . . .
Nothing contained in this paragraph affects the
right of Secured Party . . . to bring any action
or proceeding against Debtor . . . with respect to
the Collateral IQL Shares, in the courts of any
other jurisdiction.
Compl., Ex. B at 11.
Plaintiffs contend this Court has personal jurisdiction over
Defendant because Defendant waived any objection to jurisdiction
in Oregon pursuant to the Promissory Note.

According to

Plaintiffs, the Promissory Note's forum-selection clause "gave to

8 - OPINION AND ORDER

Szulik . . . the right to choose any jurisdiction in which to sue
M2, and this right was transferred to [Plaintiffs]."
Defendant, however, contends it agreed under the forumselection clause in the Promissory Note to submit to personal
jurisdiction and waived any objections to venue only as to
proceedings in state or federal court in Connecticut.

Defendant

did not waive the right to object to personal jurisdiction and/or
venue if an action on the Promissory Note was brought in any
other jurisdiction.
A.

Applicable Law
The parties do not address or analyze whether the Court

should apply federal common law, Connecticut law, or Oregon law
to determine the scope and effect of the forum-selection clause.
As noted, the Promissory Note provides it "shall be construed and
enforced in accordance with . . . [the] laws of the State of
Connecticut."
There is a split in the circuits as to the law that a
federal court sitting in diversity is to apply to interpret a
forum-selection clause when the underlying contract contains a
choice-of-law provision.

Compare Abbott Lab. v. Takeda Pharm.

Co. Ltd., 476 F.3d 421, 423 (7th Cir. 2007)(interpretation of
contractual forum-selection clauses is a matter of state contract
law, and, therefore, state law applies to interpret the clause),
and Yavuz v. 61 MM, Ltd., 465 F.3d 418, 428 (10th Cir. 2006)

9 - OPINION AND ORDER

(same) with Alexander Proudfoot Co. World Headquarters v. Thayer,
877 F.2d 912, 918-19 (11th Cir. 1989)(forum-selection clauses are
matters of personal jurisdiction, and, therefore, they must be
interpreted according to the law of the forum state), and
Preferred Capital, Inc. v. Sarasota Kennel Club, Inc., 489 F.3d
303, 307-08 (6th Cir. 2007)(same).
In Manetti–Farrow, Inc. v. Gucci America, Inc., the
Ninth Circuit rejected the contract-interpretation and personaljurisdiction approaches to forum-selection clauses.
(9th Cir. 1988).

858 F.2d 509

The Ninth Circuit concluded the enforceability

of contractual forum-selection clauses is a matter of federal
procedural law.

Id. at 513.

The court also concluded:

“[B]ecause enforcement of a forum clause necessarily entails
interpretation of the clause before it can be enforced, federal
law also applies to interpretation of forum selection clauses."
Id.

This Court must follow Ninth Circuit law and, therefore,

must interpret the forum-selection clause at issue here under
federal common law without regard to the Promissory Note's
Connecticut choice-of-law provision.
B.

Federal common law contract interpretation
When interpreting a contract according to principles of

federal common law, the courts look to “general principles for
interpreting contracts.”

County of Santa Clara v. Astra United

States, 588 F.3d 1237, 1243 (9th Cir. 2009).
10 - OPINION AND ORDER

Under the general

principles of contract interpretation, “[c]ontract terms are to
be given their ordinary meaning, and when the terms of a contract
are clear, the intent of the parties must be ascertained from the
contract itself.”

Klamath Water Users Protective Ass'n v.

Patterson, 204 F.3d 1206, 1210 (9th Cir. 2000)(citing Hal Roach
Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1549
(9th Cir. 1990)).

When interpreting a contract under federal

common law, therefore, courts must give the words of a contract
their “common or normal meaning” unless circumstances show
that a more specialized meaning is intended.

Hunt Wesson Foods,

Inc. v. Supreme Oil Co., 817 F.2d 75, 77 (9th Cir. 1987).

The

presumption is that “every provision was intended to accomplish
some purpose, and that none are . . . superfluous.”

Chaly–Garcia

v. United States, 508 F.3d 1201, 1204 (9th Cir. 2007)(quoting
Harris v. Epoch Group, L.C., 357 F.3d 822, 825 (8th Cir. 2004)).
A written contract “must be read as a whole and every part
interpreted with reference to the whole.”

Shakey's Inc. v.

Covalt, 704 F.2d 426, 434 (9th Cir. 1983).

"Preference must be

given to reasonable interpretations as opposed to those that are
unreasonable, or that would make the contract illusory.”

Id.

“The fact that the parties dispute a contract's meaning does not
establish that the contract is ambiguous; it is only ambiguous if
reasonable people could find its terms susceptible to more than
one interpre- tation.”
11 - OPINION AND ORDER

Klamath Water Users, 204 F.3d at 1210

(citing Kennewick Irrigation Dist. v. United States, 880 F.2d
1018, 1032 (9th Cir. 1989)).
C.

Analysis of forum-selection clause
The Promissory Note's forum-selection clause provides:
Maker hereby waives all right to trial by jury in
any action, suit or proceeding brought to enforce
or defend any rights or remedies under this Note,
and agrees that any lawsuit brought to enforce or
interpret the provisions of this Note shall be
instituted in state or federal courts, as
appropriate, in Fairfield County, Connecticut, and
Maker further agrees to submit to the personal
jurisdiction of such court and waives any
objection which it may have, based on improper
venue or forum non conveniens, to the conduct of
any proceeding in any such court . . . . Nothing
contained in this paragraph affects the . . .
right of Payee to bring any action or proceeding
against Maker or its property in the courts of any
other jurisdiction.

Compl., Ex. A at 5-6.

Plaintiffs contend the final sentence of

the forum-selection clause indicates Defendant waived its right
to challenge the jurisdiction and/or venue of any court in which
Szulik and, by extension, Plaintiffs choose to bring an action on
the Promissory Note.

Plaintiffs rely on a summary opinion in

Banque Nationale de Paris v. Batmanghelidj, a Second Circuit
case, to support their assertion that Defendant waived its right
to challenge the jurisdiction and/or venue of any court in which
Plaintiffs chose to bring this action.

No. 96-7444, 1997 WL

138944, at *1 (2d Cir. Mar. 18, 1997).

In Batmanghelidj the

defendants executed a note containing a forum-selection clause
that provided "any legal action or proceeding arising out of or
12 - OPINION AND ORDER

relating to this Note may be instituted in the courts of the
State of New York or of the United States of America for the
Southern District of New York."

Id.

The defendants executed an

amended note that contained a forum-selection clause as follows:
Any legal action or proceeding arising out of or
relating to this Note may be instituted in the
courts of the District of Columbia or of the
United States of America for the District of
Columbia and Maker . . . submit[s] to the
jurisdiction of each such court in any action or
proceeding; provided however, that the foregoing
shall not limit Lender's rights to bring any legal
action or proceeding in any other appropriate
jurisdiction, in which event, at Lender's option,
the laws of such jurisdiction or the District of
Columbia shall apply.
Id. (emphasis in original).

The plaintiff brought an action in

the United States District Court for the Southern District of New
York to enforce the notes.

The district court denied the

defendants' motion to dismiss for lack of personal jurisdiction
and granted the plaintiff's motion for summary judgment.

On

appeal the defendants argued the district court erred in its
construction of the forum-selection clauses contained in two
notes and, therefore, erred when it denied defendants' motion to
dismiss for lack of jurisdiction.
affirmed the district court.

Id.

The Second Circuit

The Second Circuit concluded the

second note modified rather than superseded the first note and
the forum-selection clauses of the two notes were "plainly
compatible."

Id., at *2.

clause in the second note
13 - OPINION AND ORDER

The court stated the forum-selection

contains unambiguously permissive language,
providing that a legal action may be instituted in
the District of Columbia or “in any other
appropriate jurisdiction”; such an appropriate
jurisdiction would, of course, include the
jurisdiction agreed to in the original note: New
York. We thus conclude that defendants have
submitted to the jurisdiction of the federal
district courts of the Southern District of New
York, and that the district court properly
exercised personal jurisdiction over them in this
action.
Id.
The Court notes Second Circuit Local Rule 32.1.1(b)
provides in pertinent part:
have precedential effect.

"Rulings by summary order do not

Citation to a summary order filed on

or after January 1, 2007, is permitted and is governed by Federal
Rule of Appellate Procedure 32.1 and this court’s Local Rule
32.1.1."

Accordingly, Batmanghelidj does not have precedential

effect even in the Second Circuit.

In any event, Batmanghelidj

is distinguishable from the facts here because the language in
the notes in that case was permissive.

The initial note provided

the parties "may" institute an action arising out of the note in
New York.

The second note provided the parties "may" institute

an action arising out of the note in the District of Columbia.
Here the Promissory Note provides the parties "shall" bring an
action in Connecticut.

In addition, the Batmanghelidj court

relied in part on the fact that the first note specifically
provided for jurisdiction in New York and that note was not
superseded by the second note.
14 - OPINION AND ORDER

Here neither the Promissory Note

nor the Security Agreement specifically provided for jurisdiction
in Oregon.

Finally, as noted, this Court must apply Ninth

Circuit law when determining the effect of forum-selection
clauses.

Accordingly, the Court finds Batmanghelidj unhelpful in

its analysis of the forum-selection clause in this case.
Defendant does not cite any law to support its position
that the final sentence of the forum-selection clause does not
establish Defendant waived its right to object to jurisdiction
and/or venue in any court.
As noted, federal contract-interpretation law makes
clear that the Court must read the contract as a whole and
interpret every part with reference to the whole.

In addition,

the Court must presume “every provision was intended to
accomplish some purpose, and that none are . . . superfluous.”
Chaly–Garcia, 508 F.3d at 1204.

Reading the forum-selection

clause here as a whole reflects Defendant specifically waived the
right to raise any objections to jurisdiction or venue if the
payee brought an action to enforce the Promissory Note in the
"state or federal courts, as appropriate, in Fairfield County,
Connecticut."

The final sentence of the forum-selection clause,

however, does not contain similar waiver language as to the payee
bringing an action in any court other than one in Fairfield
County, Connecticut, and it provides only that the first forumselection provision does not prohibit the payee from bringing

15 - OPINION AND ORDER

"any action or proceeding against Maker or its property in the
courts of any other jurisdiction."

The final sentence is silent

as to Defendant's ability to challenge the jurisdiction or venue
of a court other than one in Fairfield County, Connecticut.

This

interpretation gives meaning to both the waiver as to actions
brought in Fairfield County, Connecticut, and the final sentence
of the forum-selection clause.

If the Court concluded the final

sentence constitutes a waiver of Defendant's right to challenge
the jurisdiction of or venue in every court, the specific waiver
as to actions in Fairfield County, Connecticut, would be
superfluous.

Such an interpretation is unreasonable.

As noted,

the Ninth Circuit has held "[p]reference must be given to
reasonable interpretations as opposed to those that are
unreasonable, or that would make the contract illusory" when
interpreting contracts.
Accordingly, the Court concludes the forum-selection
clause in the Promissory Note does not establish that Defendant
waived its right to challenge the jurisdiction and/or venue of
this Court.
II.

Personal-jurisdiction analysis
Because Plaintiffs have not established Defendant waived the

right to challenge this Court's personal jurisdiction over
Defendant, Plaintiffs must now establish this Court has personal
jurisdiction over Defendant.

16 - OPINION AND ORDER

A.

The Law
"Personal jurisdiction over a nonresident defendant is

tested by a two-part analysis.

First, the exercise of

jurisdiction must satisfy the requirements of the applicable
state long-arm statute.

Second, the exercise of jurisdiction

must comport with federal due process."

Bauman v.

DaimlerChrysler Corp., 579 F.3d 1088, 1094 (9th Cir. 2009)
(quotations omitted).

"Oregon's long-arm statute confers

jurisdiction to the outer limits of due process under the United
States Constitution."

Pacific Reliant Indus., Inc. v. Amerika

Samoa Bank, 901 F.2d 735, 737 (9th Cir. 1990)(citation omitted).
See also J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct.
2780, 2800 n.8 (2011)("State long-arm provisions allow the
exercise of jurisdiction subject only to a due process limitation
in . . . Oregon); Or. R. Civ. P. 4L.

Oregon's long-arm statute,

therefore, is co-extensive with the limits of due process.
Gleason v. Carter, No. 3:12-CV-01265-HA, 2012 WL 4482372, at *4
n.1 (D. Or. Sept. 25, 2012).
"The due process analysis, in turn, centers on whether
[a nonresident defendant] has 'certain minimum contacts' with
[the forum state], such that the exercise of jurisdiction 'does
not offend traditional notions of fair play and substantial
justice.'"

Fiore v. Walden, 688 F.3d 558, 573 (9th Cir. 2012)

(citing Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)).
17 - OPINION AND ORDER

Here Plaintiffs contend this Court has specific
jurisdiction over Defendant rather than general jurisdiction.
A court has specific jurisdiction over a defendant "if the
controversy [was] sufficiently related to or arose out of the
defendants' contacts with the forum."

Omeluk v. Langsten Slip &

Batbyggeri A/S, 52 F.3d 267, 270 (9th Cir. 1995).

The Ninth

Circuit applies the following three-part test to determine
whether a district court constitutionally may exercise specific
jurisdiction over a nonresident defendant:
(1) The non-resident defendant must purposefully
direct his activities or consummate some
transaction with the forum or resident thereof; or
perform some act by which he purposefully avails
himself of the privilege of conducting activities
in the forum, thereby invoking the benefits and
protections of its laws;
(2) the claim must be one which arises out of or
relates to the defendant's forum-related
activities; and
(3) the exercise of jurisdiction must comport with
fair play and substantial justice, i.e. it must be
reasonable.
Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme,
433 F.3d 1199, 1205-06 (9th Cir. 2006)(quoting Schwarzenegger v.
Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)).

"If

the plaintiff fails to satisfy either of [the first two] prongs,
personal jurisdiction is not established in the forum state.
the plaintiff succeeds in satisfying both of the first two
prongs, the burden then shifts to the defendant to 'present a

18 - OPINION AND ORDER

If

compelling case' that the exercise of jurisdiction would not be
reasonable."

Schwarzenegger, 374 F.3d at 802 (quoting Burger

King Corp. v. Rudzewicz, 471 U.S. 462, 476-78 (1985)).
B.

Plaintiffs have not established Defendant directed its
activities or consummated some transaction with the
forum or its residents
It is undisputed that Defendant, a Florida corporation

with its principal place of business in Florida, and Szulik
negotiated and executed the Promissory Note and Security
Agreement in Florida.

It is also undisputed that Defendant has

never been a resident of Oregon, does not conduct business
activities in Oregon, does not have an office in Oregon or hold a
mortgage or lien on any Oregon property, and does not maintain
any bank accounts or other assets in Oregon.

In addition,

Defendant's employees and officers have never met or communicated
with any of the Plaintiffs.

Nevertheless, Plaintiffs contend

Defendant is subject to personal jurisdiction in Oregon because
Defendant placed the Promissory Note in the stream of commerce.
It is questionable whether an entity that executes a
promissory note has placed the note into the stream of commerce.
As the Supreme Court noted, "[t]he stream of commerce . . .
refers to the movement of goods from manufacturers through
distributors to consumers."

J. McIntyre Machinery, Ltd. v.

Nicastro, 131 S. Ct. 2780, 2788 (2011).

Plaintiffs do not cite

nor could the Court find any case in which it has been held that
19 - OPINION AND ORDER

signing a promissory note places the note into the stream of
commerce for purposes of personal jurisdiction.

According to

Defendant, however, even if executing a promissory note is
sufficient to place the note into the stream of commerce, more is
required than mere placement of a product into the stream of
commerce to establish specific jurisdiction.
The Supreme Court has held personal jurisdiction over
an out-of-state corporation may be appropriate when that
corporation "delivers its products into the stream of commerce
with the expectation that they will be purchased by consumers in
the forum State."

World–Wide Volkswagen Corp. v. Woodson, 444

U.S. 286, 297–98 (1980).

A majority of the Supreme Court,

however, has yet to agree on the exact requirements for
application of that theory.

In J. McIntyre Machinery and Asahi

Metal Indus. Co. v. Superior Court the plurality concluded a
company must purposefully direct some action toward the forum
state rather than merely place a product in the stream of
commerce.
112 (1987).

J. McIntyre, 131 S. Ct. at 2788; Asahi, 480 U.S. 102,
The Court indicated actions showing purposeful

direction may include "designing the product for the market in
the forum State, advertising in the forum State, establishing
channels for providing regular advice to customers in the forum
State, or marketing the product through a distributor who has
agreed to serve as the sales agent in the forum State.”

20 - OPINION AND ORDER

Asahi,

480 U.S. at 112.

The concurrence in Asahi, on the other hand,

viewed as sufficient the placement of a product in the stream of
commerce as long as the company was aware that the product was
being marketed in the forum state.

Id. at 117 (Brennan, White,

Marshall, & Blackmun, JJ., concurring).
The record here does not contain any evidence that
Defendant knew the Promissory Note was going to be sold to a
third party and then sold again to Plaintiffs.

Moreover, the

record does not reflect Defendant had any indication that it
would be required to make payments under the Promissory Note to
anyone in Oregon or that any part of the Promissory Note would be
performed in Oregon.

In addition, as noted, it is undisputed

that Defendants did not "establish[] channels for providing
regular advice to customers in [Oregon], or market[] [a] product
through a distributor who . . . agreed to serve as the sales
agent in [Oregon]."
The Court, therefore, concludes Plaintiffs have not
established this Court has jurisdiction over Defendant under the
stream-of-commerce analyses of either J. McIntyre or Asahi.
C.

Plaintiffs have not established Defendant purposefully
availed itself of the privilege of doing business in
Oregon
The first prong of the analysis relating to purposeful

availment "may be satisfied by [Defendants'] purposeful availment
of the privilege of doing business in the forum; by purposeful
21 - OPINION AND ORDER

direction of activities at the forum; or by some combination
thereof."

Yahoo! Inc., 433 F.3d at 1205-06.

"[I]n contract

cases, [the Court] typically inquire[s] whether a defendant
purposefully avails itself of the privilege of conducting
activities or consummate[s] [a] transaction in the forum,
focusing on activities such as delivering goods or executing a
contract."

Id. (quotations omitted).
Plaintiffs contend Defendant purposefully availed

itself of the privilege of doing business in Oregon when it
executed the Promissory Note.

Specifically, Plaintiffs point out

that Oregon Rule of Civil Procedure 4E(3) provides Oregon courts
have personal jurisdiction over an action that "[a]rises out of a
promise, made anywhere to the plaintiff or to some third party
for the plaintiff's benefit, by the defendant to deliver or
receive within this state or to send from this state goods,
documents of title, or other things of value."

Plaintiffs rely

on two cases to support their jurisdictional argument:

Boehm &

Co. v. Environmental Concepts, Inc., 125 Or. App. 249 (1993), and
White Stag Mfg. Co. v. Wind Surfing, Inc., 67 Or. App. 459
(1984).
In Boehm the plaintiff, an Oregon corporation, held a
promissory note executed by Defendant ECI-Del, a Delaware
corporation, and guaranteed by Defendant AMI, a Florida
corporation.

When neither of the defendants paid on the

22 - OPINION AND ORDER

promissory note, the plaintiff brought an action in Oregon state
court.

125 Or. App. at 251.

AMI moved to dismiss the matter for

lack of personal jurisdiction.
and AMI appealed.

The trial court denied the motion

On appeal the court made clear that Rule 4E(3)

was intended to extend personal jurisdiction to
the constitutional limits. Therefore, in applying
ORCP 4E(3), we first inquire whether it applies to
the transaction between the parties. If it does,
we next inquire whether that transaction presents
sufficient contacts with Oregon that the exercise
of jurisdiction does not offend traditional
notions of fair play and substantial justice.
Id. at 253.

The court noted
the execution of a guaranty to an Oregon
corporation, by itself, is insufficient to
establish personal jurisdiction. To satisfy
constitutional standards . . . there must be
evidence that the guaranty played an “integral
part in causing or promoting significant economic
consequences in Oregon.” 289 Or. at 10, 609 P.2d
361. As an example of the sort of economic
consequences it considered to be constitutionally
significant, the court referred to State ex rel
Ware v. Hieber, 267 Or. 124, 133, 515 P.2d 721
(1973), in which the execution of a personal
guaranty caused an Oregon company to continue a
franchise agreement that otherwise would have been
terminated. The most important fact in Ware, the
court said, was that the plaintiff in that case
had relied on the guaranty in conducting its
business in Oregon. State ex rel Sweere v.
Crookham, supra, 289 Or. at 9, 609 P.2d 361.
Since Sweere, we have held that “[r]eliance on a
guaranty is a critical factor” in determining the
reasonableness of asserting personal jurisdiction
over a nonresident guarantor. White Stag Mfg. Co.
v. Wind Surfing, Inc., supra, 67 Or. App. at 465.

Id. at 253-54.

The court concluded the trial court did not err

when it concluded it had personal jurisdiction over AMI on the
23 - OPINION AND ORDER

ground that AMI's guaranty was an "integral part in causing
important economic consequences in Oregon."

Id. at 254.

Specifically, the court pointed out that
AMI initiated the negotiations with plaintiff,
through its subsidiary ECI-Del. ECI-Del's
president contacted plaintiff in Oregon and
explained the terms of the transaction, which
included AMI's guaranty. Plaintiff agreed to
relinquish its shares of ECI-Fl in return for the
promissory notes that AMI guaranteed. In the
process, plaintiff changed from a mere ECI-Fl
stockholder to a holder of a promissory note from
an entirely different corporation. Plaintiff also
became a guarantor of ECI-Fl's compliance with
certain terms of the sale agreement. AMI's
eventual failure to make payments to plaintiff
impaired plaintiff's ability to move capital that
otherwise would have been available in Oregon.
Id.
In White Stag a supplier of the manufacturer defendant
Wind Surfing brought an action in Oregon against Wind Surfing and
its primary creditor Kenneth Gross as guarantor to recover on its
account with Wind Surfing, a New York resident.
461.

67 Or. App. at

Gross moved to dismiss for lack of personal jurisdiction.

The trial court concluded it had jurisdiction over Gross pursuant
to Rule 4E(3) and due process.

Id.

On appeal the court

affirmed:
Gross called White Stag's credit office in Oregon
to convince White Stag to extend credit to Wind
Surfing. To further that end, Gross had numerous
phone contacts with White Stag's credit office in
Portland over a period of several months and
subsequently guaranteed payment of Wind Surfing's
debt to White Stag's Portland office. There was
never any doubt that the extension of credit Gross
24 - OPINION AND ORDER

sought would be completed in Oregon. While a
nonresident causing the actual shipment of goods
from Oregon may give rise to personal jurisdiction
in certain circumstances, see, e.g., State ex rel.
White Lbr. v. Sulmonetti, supra, jurisdiction is
also proper when a national corporation makes all
necessary negotiations, authorizes the extension
of credit in Oregon and pursuant to these
arrangements releases goods stored in another
state. Under these circumstances, the extension
of credit has no less economic impact than the
shipment of goods.
Id. at 464-65.
Here, however, it is undisputed that Defendant did not
have any contact with Plaintiffs in person, on the telephone, or
via fax or email.

On the contrary, the record reflects Szulik's

agent, James Tagliaferri of the Taurus Advisory Group, contacted
Plaintiffs "to obtain [their] agreement to the transfer of [the
Note]."

Aff. of Mel Shulevitz at ¶2.

There is not any evidence

that Defendant was aware of Tagliaferri's actions, that Defendant
had any part in the transfer of the Promissory Note to
Plaintiffs, that Defendant entered into or had any negotiations
with Plaintiffs.

Accordingly, there is not any evidence that

Defendant played an "integral part in causing or promoting
significant economic consequences in Oregon."
D.

Plaintiffs have not established their claim is one that
arose out of or related to Defendant's forum-related
activities
Under the second prong of the personal-jurisdiction

analysis, the plaintiffs' claim must be one that arises out of or
relates to the defendant's forum-related activities.
25 - OPINION AND ORDER

Fiore, 688

F.3d at 582 (citing Menken v. Emm, 503 F.3d 1050, 1058 (9th Cir.
2007)).

The Ninth Circuit has adopted a "but for" analysis to

determine whether a plaintiff's claim arises out of a defendant's
forum-related activities.

Id.

Thus, Plaintiffs in this case

must establish they would not have been injured "but for"
Defendant's activities in Oregon.
According to Plaintiffs, they were injured because
Defendant failed to pay on the Promissory Note.

The record,

however, is devoid of forum-related activities by Defendant.

The

Promissory Note was negotiated in Florida by Szulik, a resident
of Connecticut, and Defendant, a company incorporated in Florida
with its principal place of business in Florida.

The record

reflects Szulik's agent contacted Plaintiffs as to sale of the
Promissory Note.

There is not any evidence that the parties to

the Promissory Note contemplated payment would be rendered to
persons in Oregon.

In addition, as noted, Defendant does not

have any contacts with Oregon.
On this record the Court concludes Plaintiffs have
failed to establish that they would not have been injured but for
Defendant's activities in Oregon.
As noted, "[i]f the plaintiff fails to satisfy either
of [the first two] prongs, personal jurisdiction is not
established in the forum state."

Because Plaintiffs have not

satisfied either of the first two prongs, the Court concludes

26 - OPINION AND ORDER

Plaintiffs have not established this Court has personal
jurisdiction over Defendant.

Accordingly, the Court grants

Defendant's Motion to Dismiss this matter for lack of personal
jurisdiction.
Because the Court concludes it lacks personal
jurisdiction, the Court does not address Defendant's alternative
Motions to Transfer or to Dismiss for Failure to State a Claim.

CONCLUSION
For these reasons, the Court GRANTS Defendant's Motion (#7)
to Dismiss for Lack of Jurisdiction and DISMISSES this matter for
lack of jurisdiction without prejudice.
IT IS SO ORDERED.
DATED this 6th day of February, 2013.

/s/ Anna J. Brown
ANNA J. BROWN
United States District Judge

27 - OPINION AND ORDER