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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Polar Supply Company, Inc. v. Steelmaster Industries, Inc. (12/13/2005) sp-5970

Polar Supply Company, Inc. v. Steelmaster Industries, Inc. (12/13/2005) sp-5970

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA


POLAR SUPPLY COMPANY, INC., )
) Supreme Court No. S- 11664
Appellant, )
) Superior Court No.
v. ) 3AN-03-07055 CI
)
STEELMASTER INDUSTRIES, ) O P I N I O N
INC., )
) [No. 5970 - December 23, 2005]
Appellee. )
)


          Appeal  from the Superior Court of the  State
          of    Alaska,   Third   Judicial    District,
          Anchorage, Peter A. Michalski, Judge.

          Appearances:  Lea E. Filippi and  William  M.
          Bankston,  Bankston, Gronning, OHara,  Sedor,
          Mills, Givens & Heaphey, P.C., Anchorage, for
          Appellant.  James N. Leik, Perkins Coie  LLP,
          Anchorage, for Appellee.

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh, Fabe, and Carpeneti, Justices.

          FABE, Justice.

I.   INTRODUCTION
          An Alaskan company, Polar Supply Company, Inc. (Polar),
purchased  a telescopic trolley boom from Steelmaster Industries,
Inc.  (Steelmaster), a Canadian corporation located  in  Ontario.
Polar  had  a  number of problems with the boom and brought  suit
against  Steelmaster in the Alaska superior  court.   Steelmaster
argued  that  it was entitled to dismissal for lack  of  personal
jurisdiction,  and  the superior court agreed, dismissing  Polars
suit.   We  reverse  because  we conclude  that  an  exercise  of
personal  jurisdiction  over  Steelmaster  is  appropriate  under
Alaskas long-arm statute and conforms to the requirements of  due
process.
II.  FACTS AND PROCEEDINGS
          Polar  Supply  Company, Inc. is an Alaskan corporation.
Steelmaster Industries, Inc. is a Canadian corporation located in
Mississauga, Ontario.  Presidents from both companies met for the
first  time  in Nevada at a National Concrete Masonry Association
convention.  Steelmaster provided brochures and sales information
about   its  products  during  the  convention.   Following   the
convention,  Polar  contacted  Steelmaster  to  request  a  price
quotation  for  a  telescopic trolley boom.  Steelmaster  sent  a
sales  proposal to Polar on January 20, 2000, quoting a price  of
$44,950  for  a  120-35TC telescopic boom.  Polar  accepted  this
proposal  in  April  2000.  Polar discussed  the  possibility  of
becoming  a  dealer for Steelmaster in Alaska  and  requested  an
eighteen  percent dealer discount, but there is no evidence  that
the  parties  entered  into a dealership agreement  or  that  the
proposed  discount  was  accepted by  Steelmaster.   Steelmasters
contract  of  sale includes a one-year warranty covering  product
defects.
          Steelmaster  manufactured the boom in  Ontario.   Polar
purchased  and  shipped  the boom free  on  board  (F.O.B.)  from
Steelmasters  manufacturing facility in Ontario to a  company  in
Washington  where the boom was mounted onto a truck.  Polar  then
had  the truck and boom shipped from Washington to Alaska,  where
it  was load tested.  The boom failed to sustain the radius  load
represented  by  Steelmaster and was deemed  unsuitable  for  the
truck on which it was mounted.
          On May 1, 2003, Polar filed suit against Steelmaster in
Alaska,  seeking  consequential damages for loss  of  production,
loss  of  use,  loss  of  jobs, and loss of profits.  Steelmaster
immediately moved for dismissal for lack of personal jurisdiction
and insufficient service of process.  Polar then cured any defect
in  service of process with service of a supplemental summons and
moved  for permission to conduct jurisdictional discovery  as  to
whether  Steelmaster had sufficient ongoing contacts with  Alaska
to support an exercise of specific jurisdiction.
          On July 30, 2004, the superior court ordered the matter
dismissed without prejudice but did not reference Polars  request
for discovery.1  On August 25, 2004, a final judgment was entered
awarding  $2,166.45 in attorneys fees and costs  to  Steelmaster.
Polar appeals.
III. DISCUSSION
     A.   Standard of Review
          We  review questions regarding personal jurisdiction de
novo because [j]urisdictional issues are questions of law subject
to  this courts independent judgment.2  We adopt the rule of  law
that is most persuasive in light of precedent, reason, and policy
when it comes to jurisdictional questions.3
     B.    The Exercise of Personal Jurisdiction over Steelmaster
Is Proper.
          Alaskas  long-arm statute, AS 09.05.015, is  broad  and
refers  to  several specific circumstances under  which  personal
jurisdiction may be exercised.  These circumstances are not meant
to  be  exclusive4 but rather provide an authoritative basis  for
simplifying most jurisdictional questions.  By furnishing a  list
of  specific  grounds providing jurisdiction, the statute  avoids
converting  every  jurisdictional  issue  into  a  constitutional
question.5
          For  those  circumstances that do not  fit  within  the
terms  of  the statutory provisions, AS 09.05.015(c) states  that
[t]he  jurisdictional grounds stated in (a)(2)  -  (10)  of  this
section are cumulative and in addition to any grounds provided by
the  common law.  The insertion of this language into the statute
manifests the legislatures intent to have the long-arm statute co-
extensive  with  the  Fourteenth  Amendment.6   As  we   recently
explained  in  Cramer  v. Wade, even if  they  had   merit,  [the
defendants]   specific   long-arm   challenges   would   not   be
determinative because our long-arm statutes catch-all  subsection
(c)  extends  to  any  case falling outside  the  statutes  other
subsections  in which the exercise of jurisdiction is permissible
under  the  Fourteenth Amendment.7  Thus, we need  not  determine
whether  this  case fits perfectly within subsections  (a)(4)  or
(a)(5)  if  we conclude that due process permits the exercise  of
jurisdiction over Steelmaster.
          Arguably, jurisdiction over Steelmaster is specifically
authorized  in  this case by two subsections of AS  09.05.015(a).
Subsection  (a)(4)8 provides jurisdiction in an  action  claiming
injury to person or property in [Alaska] arising out of an act or
omission out of [Alaska].  This provision is applicable if (a) at
the  time  of  injury,  solicitation or service  activities  were
carried  on  in  Alaska by or on behalf of the defendant  or  (b)
products,   materials,   or   things  processed,   serviced,   or
manufactured by the defendant were used or consumed in Alaska  in
the ordinary course of trade.9  Polar claims that economic losses
are  sufficient to constitute injury under subsection  (a)(4)  of
the  long-arm statute.  The additional requirements of subsection
(a)(4)  are  satisfied by Steelmaster having sold  a  product  to
Polar,   an   Alaskan  company.   Steelmasters  contention   that
subsection (a)(4)(B) is inapplicable where only a single  product
is  sold  because the statutory language refers in the plural  to
products,  materials, or things manufactured by the  out-of-state
defendant  is  not an argument in keeping with the reach  of  the
long-arm statute or with our previous cases.10  Nevertheless,  it
does  remain  unclear  whether  monetary  damages  stemming  from
breach  of  contract  actions,  rather  than  tort  actions,  can
constitute  injury  to  property, as required  by  the  statutory
provision  and  this  case  therefore  fits  uneasily  into   the
requirements of subsection (a)(4).
          Subsection (a)(5)11 of the long-arm statute specifies an
array of contract  actions that provide a basis for jurisdiction,
including an action that relates to goods . . . actually received
by  the plaintiff in this state from the defendant without regard
to where delivery to the carrier occurred.12  Subsection (a)(5)(C)
further provides for jurisdiction in an action that arises out of
          a promise, made anywhere to the plaintiff . . . by the defendant
to  deliver  or receive in this state or to ship from this  state
goods,  documents of title or other things of value.13   At  oral
argument,  Steelmaster disputed subsection (a)(5)s applicability,
relying  on  the fact that Steelmaster itself never  shipped  the
boom  to  Alaska but instead arranged for Polar to ship  it  from
Steelmasters manufacturing facility to Washington, where  it  was
then  mounted onto the truck and subsequently shipped to  Alaska.
Solely  because   of  the   nature of the shipping  arrangements,
then,  the  case does not fall easily within the requirements  of
subsection (a)(5) of the long-arm statute.
          Since  the  unique nature of this contract  makes  this
case difficult to categorize within the enumerated provisions  of
the  statute, we find it more appropriate to examine jurisdiction
using  the  standards  set by AS 09.05.015(c),  which  authorizes
Alaskas  courts  to  assert jurisdiction to  the  maximum  extent
permitted  by  due process.14  We traditionally analyze  personal
jurisdiction   under  the  long-arm  statute  by  examining   the
requirements of due process.  As the United States Supreme  Court
explained  in International Shoe Co. v. Washington,  due  process
requires  that a defendant have minimum contacts with  the  forum
state  such that maintaining a suit in the forum state  does  not
offend traditional notions of fair play and substantial justice. 15
          When  a  controversy is related to or arises out  of  a
defendants  contacts with the forum, the exercise of jurisdiction
is  said  to  be specific and is justified on the  basis  of  the
relationship among the defendant, the forum, and the litigation.16
An  out-of-state defendant who has not consented to suit  in  the
forum  state  is said to have fair warning that his conduct  will
render  him  liable to suit if he has purposefully  directed  his
activities at residents of the forum17 and the litigation  arises
out  of  or  relates  to those activities.18  The  United  States
Supreme  Court has further emphasized that parties who reach  out
beyond   one  state  and  create  continuing  relationships   and
obligations  with  citizens  of  another  state  are  subject  to
regulation  and sanctions in the other State for the consequences
of their activities.19  And we have recognized that [t]he contract
along  with  such other factors as prior negotiations and  future
consequences . . . and the parties actual course of dealing . . .
must   be   evaluated  in  determining  whether   the   defendant
purposefully established minimum contacts with the forum. 20   We
have  found  it  particularly significant  when  an  out-of-state
defendant solicited, initiated, or directly contacted the Alaskan
resident.21
          In  this instance, Steelmaster traveled to Nevada to  a
trade  show of the National Concrete Masonry Association in order
to  market its equipment.   Steelmaster sought purchasers for its
products at this Nevada convention, where prospective buyers from
throughout   the   United   States   were   presumably   present.
Steelmaster relies on the fact that Polar initiated contact  with
Steelmaster  in Ontario, but it is undisputed that Polar  learned
about Steelmasters product and availability at the trade show  in
the  United  States.   Although Steelmaster  does  not  advertise
specifically  in Alaska, it does buy advertisements  in  national
          trade journals published by the National Concrete Masonry
Association.   Steelmaster also has five dealers in  the  eastern
and  central regions of the United States.  Moreover, the  record
indicates  that Steelmaster held itself out on its website  as  a
company that offer[s] complete, factory backed local distribution
to   service   the  masonry,  precast  and  building   industries
throughout  North America.  Because Steelmaster holds itself  out
to  buyers  throughout  the United States,  it  therefore  should
reasonably have anticipated that its products would be  purchased
by Alaskan companies.
          Moreover,  at  the  time  Steelmaster  entered  into  a
contract  for the sale of the trolley boom to Polar,  Steelmaster
was  aware that Polar was an Alaskan corporation that planned  to
use  the trolley boom in Alaska.  Polar maintains that apart from
the  contract itself, Steelmaster had other contacts with Alaska,
including negotiations about the contract, discussions about  the
possibility   of   Polar  becoming  a  dealer  for   Steelmasters
operations in Alaska, and provision of an express warranty in the
contract that created an ongoing obligation to service and repair
the  boom  for  a year after sale.  Steelmaster guaranteed  Polar
that any [d]efects developing in any part of a machine . . . will
be  replaced or repaired free of charge at our option within  one
year.  This warranty clause is an example of a party purposefully
creating  continuing relationships and obligations with  citizens
of another state and thereby subjecting that party to regulations
and sanctions in that other state as a consequence.22
          We  have  previously explained that emphasis should  be
placed on the quality rather than the quantity of the contacts.23
As   the  Ninth  Circuit  reasoned,  [t]he  purposeful  availment
requirement  is  met  if  the defendant performed  some  type  of
affirmative  conduct which allows or promotes the transaction  of
business within the forum state. 24  We conclude that Steelmaster
made   the  affirmative  choice  to  contract  with  an   Alaskan
corporation that planned to use its product in Alaska  and  hence
conclude  that  Steelmaster purposefully availed  itself  of  the
privilege of conducting business activities within Alaska.25
          The  final  inquiry required by due process is  whether
the  assertion of personal jurisdiction comports with  fair  play
and  substantial justice.26  Once it has been determined  that  a
defendant purposefully established minimum contacts with  Alaska,
he must present a compelling case that the presence of some other
considerations would render jurisdiction unreasonable in order to
defeat personal jurisdiction.27  In making this determination, we
evaluate several factors, including: the burden on the defendant,
the  forum  states  interest  in adjudicating  the  dispute,  the
plaintiffs interest in obtaining convenient and effective relief,
the  interstate judicial systems interest in obtaining  the  most
efficient resolution of controversies, and the shared interest of
the states in furthering fundamental social policies.28
          Steelmaster argues that as a small Canadian corporation
with  only eighteen employees, it would face a tremendous  burden
defending  litigation in Alaska because its  employees  would  be
forced  to  travel  thousands of miles from  their  residence  in
Ontario,  at  considerable expense, inconvenience,  and  loss  of
          time.  Polar does not dispute this, but rather argues that
because  Steelmaster  does not limit its business  activities  or
advertising  to  Canada, it should be required to litigate  where
its products fail.
          First,  we  agree  with  the  Ninth  Circuit  that  the
existence  of an ongoing relationship with the United  States  is
relevant  when considering sovereignty concerns,29  and  find  it
significant that Steelmaster has dealers in Illinois,  New  York,
New  Jersey,  Maryland,  and Florida.  We  are  unconvinced  that
Steelmaster would be more inconvenienced by a suit in Alaska than
by  a  suit brought in one of these other states.  Similarly,  it
seems reasonable for Steelmaster to anticipate a possible lawsuit
in  Alaska  from  the  sale of a complicated piece  of  machinery
valued  at  almost  $45,000,  which  it  has  guaranteed  against
defects.
          Second,  Steelmaster argues that  Ontario  would  be  a
suitable alternative forum and contends that because the boom was
assembled  in  Ontario any alleged defect will require  testimony
from  Steelmaster employees involved in the assembly.  But as  we
have  previously  explained, [i]nconvenience  to  at  least  some
parties  will  probably be associated with litigation  in  either
this  jurisdiction or the [foreign] forum which  [the  defendant]
prefers.30   While it is true that the boom was  manufactured  in
Ontario,   it  was  tested  by  the  American  Bureau  of   Crane
Inspection, Inc. in Alaska, where it failed to sustain the radius
load represented by Steelmaster.  Thus, both parties stand to  be
inconvenienced because testimony will be required from  witnesses
in  Ontario  and Alaska, and Steelmasters inconvenience  in  this
instance is not sufficient to constitute a denial of due process.
We conclude that Steelmaster has sufficient minimum contacts with
Alaska and that an exercise of personal jurisdiction in this case
comports with fair play and substantial justice.
IV.  CONCLUSION
          For  the  foregoing  reasons, we REVERSE  the  superior
courts   order   dismissing  the  case  for  lack   of   personal
jurisdiction  and  REMAND for proceedings  consistent  with  this
opinion.
_______________________________
     1     Our  resolution of this case does not  require  us  to
reach  Polars claim that the superior court abused its discretion
when  it  refused to permit additional discovery  as  to  whether
Steelmaster was subject to general jurisdiction.

     2     See S.B. v. State, Dept of Health & Soc. Servs.,  Div.
of  Family  & Youth Servs., 61 P.3d 6, 10 (Alaska 2002)  (quoting
McCaffery v. Green, 931 P.2d 407, 408 n.3 (Alaska 1997)).

     3     Id.  (quoting  Guin  v. Ha, 591 P.2d  1281,  1284  n.6
(Alaska 1979)).

     4    See McCaffery v. Green, 931 P.2d 407, 408 (Alaska 1997)
(citing  Alaska  Telecom, Inc. v. Schafer, 888  P.2d  1296,  1299
(Alaska 1995)).

     5    Alaska Telecom, 888 P.2d at 1299.

     6    Id.

     7     985  P.2d  467,  471 (Alaska 1999) (citing  Glover  v.
Western  Air Lines, Inc., 745 P.2d 1365, 1367 (Alaska  1987)  and
Alaska Telecom, 888 P.2d at 1299).

     8    AS 09.05.015(a)(4) provides:

               (a)    A  court  of  this  state  having
          jurisdiction  over  the  subject  matter  has
          jurisdiction  over  a  person  served  in  an
          action  according  to  the  rules  of   civil
          procedure
          
               . . . .

               (4)            in an
                              actio
                              n
                              claim
                              ing
                              injur
                              y  to
                              perso
                              n  or
                              prope
                              rty
                              in
                              this
                              state
                              arisi
                              ng
                              out
                              of an
                              act
                              or
                              omiss
                              ion
                              out
                              of
                              this
                              state
                              by
                              the
                              defen
                              dant,
                              provi
                              ded,
                              in
                              addit
                              ion,
                              that
                              at
                              the
                              time
                              of
                              the
                              injur
                              y
                              eithe
                              r
                              
               (A)   solicitation or service activities
          were carried on in this state by or on behalf
          of the defendant; or
          
               (B)    products,  materials,  or  things
          processed, serviced, or manufactured  by  the
          defendant were used or consumed in this state
          in the ordinary course of trade[.]
          
     9    AS 09.05.015(a)(4)(A) & (B).

     10     See, e.g., Jonz v. Garrett/Airesearch Corp., 490 P.2d
1197,  1199  (Alaska  1971)  (citing International  Shoe  Co.  v.
Washington, 326 U.S. 310, 319 (1945)).

     11    AS 09.05.015(a)(5) provides:

               (a)    A  court  of  this  state  having
          jurisdiction  over  the  subject  matter  has
          jurisdiction  over  a  person  served  in  an
          action  according  to  the  rules  of   civil
          procedure
          
               . . . .

               (5)  in an action that
          
               (A)   arises  out  of  a  promise,  made
          anywhere  to the plaintiff or to  some  third
          party  for  the  plaintiffs benefit,  by  the
          defendant  to perform services in this  state
          or  to  pay  for services to be performed  in
          this state by the plaintiff;
          
               (B)   arises  out  of services  actually
          performed  for the plaintiff by the defendant
          in this state, or services actually performed
          for  the  defendant by the plaintiff in  this
          state  if  the performance in this state  was
          authorized or ratified by the defendant;
          
               (C)   arises  out  of  a  promise,  made
          anywhere  to the plaintiff or to  some  third
          party  for  the  plaintiffs benefit,  by  the
          defendant to deliver or receive in this state
          or  to  ship from this state goods, documents
          of title, or things of value;
          
               (D)   relates  to  goods,  documents  of
          title, or other things of value shipped  from
          this  state by the plaintiff to the defendant
          on  the  order or direction of the defendant;
          or
          
               (E)   relates  to  goods,  documents  of
          title,  or  other  things of  value  actually
          received by the plaintiff in this state  from
          the   defendant  without  regard   to   where
          delivery to the carrier occurred.
          
     12    AS 09.05.015(a)(5)(E).

     13    AS 09.05.015(a)(5)(C).

     14     Am. Natl Bank & Trust Co. v. Intl Seafoods of Alaska,
Inc.,  735 P.2d 747, 749 (Alaska 1987) (citing Jonz, 490 P.2d  at
1199).

     15     326 U.S. at 316 (quoting Milliken v. Meyer, 311  U.S.
457, 463 (1940)).

     16      Glover,   745  P.2d  at  1367  (citing  Helicopteros
Nacionales de Colombia v. Hall, 466 U.S. 408, 414 & n.8 (1985)).

     17     Burger  King Corp. v. Rudzewicz, 471  U.S.  462,  472
(1985)  (citing Keeton v. Hustler Magazine, Inc., 465  U.S.  770,
774 (1984)).

     18    Id. at 472 (citing Helicopteros, 466 U.S. at 414).

     19     Id.  at 473 (citing McGee v. International Life  Ins.
Co.,  355  U.S. 220, 222-23 (1957) and Travelers Health  Assn  v.
Virginia, 339 U.S. 643, 647 (1950)).

     20    Alaska Telecom, 888 P.2d at 1300 (quoting Burger King,
471 U.S. at 479).

     21    See, e.g., Cramer, 985 P.2d at 471; Alaska Telecom, 888
P.2d at 1301; Am. Natl Bank, 735 P.2d at 752-53 n.10.

     22     Am. Natl Bank, 735 P.2d at 752 (quoting Burger  King,
471 U.S. at 472).

     23    Jonz, 490 P.2d at 1199 (citing International Shoe, 326
U.S. at 319).

     24    Harris Rutsky & Co. Ins. Svcs., Inc. v. Bell & Clements
Ltd.,  328  F.3d  1122,  1130 (9th Cir. 2003)  (quoting  Sher  v.
Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990)).

     25    Am. Natl Bank, 735 P.2d at 752.

     26    Id. at 753.

     27    Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1114 (9th
Cir. 2002) (quoting Burger King, 471 U.S. at 477).

     28    Am. Natl Bank, 735 P.2d at 753.

     29    See Sinatra v. Natl Enquirer, 854 F.2d 1191, 1199 (9th
Cir.  1988)  (recognizing that continuing  contacts  between  the
[Swiss]   Clinics  United  States-based  agent   and   California
translate  into less of a litigation burden than  if  the  Clinic
maintained no physical presence or agent with the United States).

     30     Volkswagenwerk, A.G. v. Klippan, GmbH, 611 P.2d  498,
502  (Alaska 1980) (rejecting two German corporations claims that
subjecting  them  to  suit in Alaska would  be  unreasonable  and
explaining  that  Alaskas jurisdictional  power  must  be  upheld
despite  claims  of  inconvenience and unreasonableness  by  [the
nonresident defendant]).