District Court Exercises Personal Jurisdiction Where Defendants Acquired and Breached a Duty to Plaintiff With Knowledge That the Injury to Plaintiff’s Business Would Be Felt in The Forum State

The World in U.S. Courts: Winter 2015 - Personal Jurisdiction

Concur-Texas, L.P. v. Duradril, LLC, et al., U.S. District Court for the District of Utah, Central Division, November 4, 2014

Plaintiff Concur is a Utah limited partnership with its principal place of business in Salt Lake City, Utah. Defendant Dynomax Drilling Tools, Inc. (“Dynomax-Canada”) is a Canadian corporation, with its principal place of business in Alberta, Canada. Defendant Dynomax Drilling USA, Inc. (“Dynomax-USA”) is a Texas corporation with its principal place of business in Harris County, Texas. Concur entered into an agreement with Dynomax-Canada to purchase 29 pieces of heavy equipment called slide reamers. As part of the agreement, the president of Dynomax-Canada executed a Vendor Certificate that stated, in part, that the “Vendor hereby irrevocable [sic] submits and consents to the exclusive jurisdiction of the state and federal Courts located in the County of Salt Lake, State of Utah and waives any objection it may now or hereafter have to venue or to convenience of forum.” Concur subsequently leased all of the purchased slide reamers to Defendant Duradril. The lease between Concur and Duradril contained a similar mandatory Utah venue provision in its Vendor Certificate. Duradril continued to make payments on the slide reamers to Concur until the shortly after the Dynomax entities purchased Duradril. Concur alleged that Dynomax had assumed the obligations of Duradril, and sued the Dynomax entities, which argued that the case should be dismissed because personal jurisdiction over them could not be asserted in Utah.

The Court stated that it could assert specific personal jurisdiction over a nonresident where the defendant has purposefully directed his activities at residents of the forum, and the litigation results from alleged injuries that arise out of or are related to those activities. The specific jurisdiction inquiry is two-fold. To show “purposeful direction,” the Court required (1) an intentional action by the defendant that was (2) expressly aimed at the forum state (3) with knowledge that the brunt of the injury would be felt in the forum state. Further, if the defendant’s activities create sufficient minimum contacts, then the Court must consider whether the exercise of personal jurisdiction over the defendants offends traditional notions of fair play and substantial justice.

The Court found that Plaintiff had sufficiently alleged “purposeful direction” and the Dynomax defendants had the requisite minimum contacts with Utah. The Court first observed that Concur had alleged an intentional wrongful act by the Dynomax defendants—i.e., they were alleged to have breached the Lease and retained equipment that belonged to Plaintiff despite knowing that Concur was its rightful owner. Second, the Court found that the Dynomax defendants’ conduct was expressly aimed at the forum as it appeared their goal was effectively to reach into Utah and unlawfully take Concur’s property for their own use. Additionally, the Dynomax defendants knew that both the original Vendor Certificate and Lease contained a mandatory Utah venue provision. Finally, the Court found that there was no meaningful dispute that the brunt of Plaintiff’s injury was suffered in the forum state.

The Court also found that the Dynomax defendants were unable to present a compelling case that the exercise of jurisdiction would be unreasonable. The Court considered a variety of factors: (1) the burden on the defendant, (2) the forum state’s interest in resolving the dispute, (3) the plaintiff’s interest in receiving convenient and effective relief, (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental substantive social policies.

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