Opinion
No. CV 04-4006087
October 25, 2005
MEMORANDUM OF DECISION
Goldstar Medical Services, Inc. ("Goldstar"), a Connecticut corporation, has filed an application for prejudgment remedy in connection with a collection and breach of contract action to be commenced against Berkshire Healthcare Systems, Inc. ("BHCS"), a Massachusetts Corporation. Before the court is BHCS's motion to dismiss the proceeding because the court lacks jurisdiction over BHCS.
Practice Book § 10-31(a)(2) provides that a "motion to dismiss shall be used to assert . . . lack of jurisdiction over the person . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Brookridge District Ass'n. v. Planning Zoning Commission, 259 Conn. 607, 611, 793 A.2d 215 (2002). "In ruling upon whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader. (Internal quotation marks omitted.) Id., 610. "A motion to dismiss admits all facts well pleaded and invokes any record that accompanies the motion, including supporting affidavits that contain undisputed facts." (Internal quotation marks omitted.) Coughlin v. Waterbury, 61 Conn.App. 310, 314, 763 A.2d 1058 (2001).
The affidavits accompanying the respective memoranda of BHCS and Goldstar and the affidavit filed in support of Goldstar's Application for Prejudgment Remedy provide, for the purpose of this motion to dismiss, the CT Page 13351-kx following facts:
Goldstar, a Connecticut corporation that supplies respiratory equipment and related services, was first contacted in December 1998 by The Wingate Corporation, acting on behalf of Cenpha Inc., a Massachusetts corporation. ("Cenpha"). Goldstar and Cenpha subsequently entered into contracts, giving Goldstar the right to provide four of Cenpha's facilities with 90% of their respiratory therapy equipment, products, supplies, and services, as requested by the facilities. The written contracts between Goldstar and Cenpha, (collectively referred to herein as "the Agreement") outlining the parties' respective obligations, includes an "applicable law" clause that states "this agreement shall be governed by, construed and enforced in accordance with the laws of the State of Massachusetts."
Golstar entered into four separate contracts with Cenpha, Inc.: d/b/a Wildwood of Great Barrington, d/b/a Wildwood of Pittsfield, Inc., d/b/a Wildwood of Williarnstown, Inc. and d/b/a Wildwood of North Adams, Inc.
BHCS purchased Cenpha on February 1, 2000, and assumed all rights and obligations under the Agreement. Goldstar continued providing services following the acquisition. BHCS accessed Goldstar's services by placing daily and/or weekly orders, in accordance with industry custom and the business practices between BHCS and Goldstar. Agents, employees, and representatives of BHCS contacted Goldstar by telephone at Goldstar's Connecticut offices to place the orders.
BHCS stopped paying for Goldstar's services and has continued to default, despite demand for payment. During 2004, agents and employees of BHCS entered into negotiations with Goldstar regarding settlement for amounts past due. During these negotiations, Goldstar President Bouchard was told that if Goldstar were willing to accept less than the full amount claimed, BHCS would, in exchange for the reduction of the debt, extend the contracts with Goldstar for the 2005 calendar year. Goldstar did reduce the amount owed by BHCS in exchange for an agreement to continue the Agreement. Subsequently, on October 28, 2004, BHCS notified Goldstar that it was terminating the Agreement with Goldstar and would be utilizing another vendor for the 2005 calendar year. Goldstar states that it lost revenue for both the reduction of the debt and future profits CT Page 13351-ky that would have been earned had BHCS not reneged on its commitment to continue with Goldstar for the 2005 calendar year.
The issue presented here is whether the court has personal jurisdiction over BHCS in this matter, specifically whether the plaintiff has satisfied the requirements of Connecticut's longarm statute to litigate this matter in this state. When a defendant challenges personal jurisdiction, the plaintiff bears the burden of proving the court's jurisdiction. Knipple v. Viking Comm., LTD, 236 Conn. 602, 607, 674 A.2d 426 (1996). In a two-part inquiry, the trial court must decide first whether the applicable long-arm statute authorizes the assertion of jurisdiction over the defendant, and if this requirement is met, the court then must decide whether the exercise of jurisdiction over the defendant would violate constitutional principles of due process. Knipple v. Viking Comm. Ltd., 236 Conn. at 606, 674 A.2d 426.
The applicable longarm statute, Conn. Gen. Stat. § 33-1219(f), provides:
(f) Every foreign corporation shall be subject to suit in this state, by a resident of this state or by a person having a usual place of business in this state, whether or not such foreign corporation is conducting or has conducted affairs in this state and whether or not it is engaged exclusively in interstate or foreign commerce, on any cause of action arising as follows: (1) Out of any contract made in this state or to be performed in this state; (2) out of any solicitation in this state by mail or otherwise if the corporation has repeatedly so solicited, whether the orders or offers relating thereto were accepted within or without the state; (3) out of the production, manufacture or distribution of goods by such corporation with the reasonable expectation that such goods are to be used or consumed in this state and are so used or consumed, regardless of how or where the goods were produced, manufactured, marketed or sold or whether or not through the medium of independent contractors or dealers; or (4) out of tortious conduct in this state, whether arising out of repeated CT Page 13351-lz activity or single acts, and whether arising out of misfeasance or nonfeasance.
Conn. Gen. Stat. § 33-1219(f).
BHCS in its memorandum asserts that there is no basis for jurisdiction, arguing that Goldstar has failed to identify any contact between BHCS and Connecticut that would satisfy any of the prongs of Connecticut's long-arm statute, and that even if Goldstar were able to satisfy the requirements of the statute, this court's exercise of personal jurisdiction over BHCS would violate the due process clause of the Fourteenth Amendment of the United States Constitution. Citing several cases, BHCS maintains that because the only contact it had with Goldstar was by telephone, personal jurisdiction over BHCS is improper as a matter of law.
Goldstar, in its memorandum argues that the court may properly assert jurisdiction over BHCS since it has sufficient ties to Connecticut. Goldstar calls the court's attention to § 33-1219(f)(2) of the statute, emphasizing that the initial contact made by The Wingate Corporation on behalf of Cenpha, BHCS's predecessor, coupled with the subsequent orders placed daily and/or weekly over a period of years, constitute solicitation as imagined by the long-arm statute.
In Zartolas v. Nisenfeld, 184 Conn. 471, 440 A.2d 179 (1981), our Supreme Court articulated the test for determining "whether the plaintiffs' cause of action arose from the defendants' transaction of business within this state . . . [W]e do not resort to a rigid formula. Rather, we balance considerations of public policy, common sense, and the chronology and geography of the relevant factors." Zartolas v. Nisenfeld, 184 Conn. 481, 477, 440 A.2d 179. The Court in Zartolas was considering C.G.S.A. § 52-59(b) and assessing the phrase "transacts business" under the long-arm statute. Similarly, in Frazer v. McGowan, 198 Conn. 243, 502 A.2d 905 (1986), in determining whether or not a Connecticut court could exercise personal jurisdiction over a hospital located in Rhode Island, pursuant to then General Statutes § 33-519c (now 33-1219(f)), the Court stated, ". . . it is the totality of the defendant's CT Page 13351-la conduct and connection with this state that must be considered, on a case by case basis, to determine whether the defendant could reasonably have anticipated being haled into court here." 198 Conn. 249, 502 A.2d 905, citing World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). The Court has articulated a test that takes into consideration more than merely the number of phone calls made by the defendant in order to determine sufficiency of contact and whether jurisdiction is authorized.
Sec. 52-59b. Jurisdiction of courts over nonresident individuals, foreign partnerships and foreign voluntary associations. Service of process.
(a) As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident individual, foreign partnership or foreign voluntary association, or over the executor or administrator of such nonresident individual, foreign partnership or foreign voluntary association, who in person or through an agent: (1) Transacts any business within the state; (2) commits a tortious act within the state, except as to a cause of action for defamation of character arising from the act; (3) commits a tortious act outside the state causing injury to person or property within the state, except as to a cause of action for defamation of CT Page 13351-lf character arising from the act, if such person or agent (A) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce; (4) owns, uses or possesses any real property situated within the state; or (5) uses a computer, as defined in subdivision (1) of subsection (a) of section 53-451, or a computer network, as defined in subdivision (3) of subsection (a) of said section, located within the state.
The pleadings and affidavits from both parties reveal that there has been an ongoing business relationship between Goldstar and BHCS or its predecessor Cenpha since December 1998, that continued at least until the breakdown of negotiations in October 2004. According to the Plaintiff, the initial contact was made by Wingate, phoning Goldstar's Connecticut office in order to inquire as to whether Goldstar would consider providing the Massachusetts facilities with respiratory supplies and services. The Agreement itself is a Goldstar contract, drafted and offered by a Connecticut corporation. At least a portion of the work required by the contract would be performed in Connecticut, since Goldstar's home base was in Connecticut, the products and services required for delivery in Massachusetts would originate in Connecticut.
The phone calls to Goldstar made by agents of BHCS to place orders for delivery of oxygen and other respiratory supplies to its four facilities in Massachusetts may also be characterized as contact with Connecticut, justifying this court's jurisdiction. While the defendant cites several cases in support of the position that phone calls into Connecticut do not confer jurisdiction, these cases are distinguishable from the case at bar in that the present case involves a long-term business relationship over a period of years. BHCS's predecessor and its agents made initial contact with Goldstar, and continued to initiate contact with Goldstar at Goldstar's Connecticut office on a daily and/or weekly basis for a period of approximately five years. Conversely, Fiedler v. First City National Bank of Houston, Inc., 807 F.2d 315 (2nd Cir. 1986), cited by the Defendant, involved two phone calls and one CT Page 13351-lb mailing. The court in Fiedler found it was unable to find that jurisdiction could be premised on the only alleged contacts, two calls and one mailing. 807 F.2d 315, 318. The Defendant also cites RJM Group et al. v. American Association of Franchises and Dealers, et al., Superior Court, judicial district of Danbury, Docket No. 329548 (March 19, 1998, Leheny, J.), arguing that the court found numerous calls and emails into forum as insufficient to establish jurisdiction. However, the facts in RJM Group are distinguishable from the present case. The parties dispute in RJM Group regarded a promise to reimburse for expenses which the court analogized to a promissory note, citing to Diversified Financial SYS. v. Castelli, Superior Court, judicial district of Hartford/New Britain at New Britain, Docket No. 465911 (April 25, 1995, Handy, J.) (The signing of a promissory note in Connecticut, without more, does not satisfy minimum contacts.). The business relationship between Goldstar and BHCS is different from those cited by the defendant. Here, there is an ongoing, long-term relationship, characterized by regular — at times daily — contact by BHCS to Goldstar in Connecticut, involving regular transport of goods, supplies and services from Connecticut to Massachusetts. The proximity of the parties to each other is reflected in Paragraph 3 of the Agreement, which required Goldstar, at the request of BHCS, to deliver equipment from Connecticut to Massachusetts within two hours, weather permitting. Therefore, while courts have declined to extend jurisdiction over a foreign entity or corporation where there were insufficient contacts with the state, there are ample facts in this case, when considered in their totality, to find that BHCS had sufficient contacts with the state to confer jurisdiction over BHCS under Connecticut's long-arm statute.
Turning now to the question of whether the exercise of personal jurisdiction over BHCS would violate the due process clause of the Fourteenth Amendment of the Constitution, the court must consider whether the defendant has sufficient contact with the forum "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Thomason v. Chemical Bank, 234 Conn. 281, 287, 661 A.2d 595 (1995), quoting International Shoe Co. v. CT Page 13351-lc Washington, 326 U.S. 310, 316 (1945). The rationale of this requirement is to protect "an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations." Panganiban v. Panganiban, 54 Conn.App. 634, 638-39, 736 A.2d 190 (1999), citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985). The United States Supreme Court "has held that the test to be applied in considering the reach of personal jurisdiction is whether (1) the nonresident party has created a substantial connection to the forum state by action purposefully directed toward the forum state . . . and (2) the exercise of jurisdiction based on those minimum contacts would not offend traditional notions of fair play and substantial justice." Id. at 639.
The first prong of the inquiry, whether minimum contacts have been established, is analyzed both under specific jurisdiction, which exists where a state "exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum" and under general jurisdiction, which "is based on the defendant's general business contacts with the forum state and permits a court to exercise its power in a case where the subject matter of the suit is unrelated to those contacts." Id. at 640. The Defendant's contacts with Connecticut, described above, were substantial. BHCS had daily and/or weekly contact with Connecticut over a period of five years. This level of consistent contact gives rise to specific jurisdiction. The contract was entered into, executed, and performed, at least in part, in this state and Connecticut is where BHCS called regularly to place orders. It is therefore proper to conclude that BHCS had sufficient contact with Connecticut to justify the exercise of personal jurisdiction over the company.
Considering the reasonableness of exercising jurisdiction over BHCS, "the [United States] Supreme Court has held that the court must evaluate the following factors as part of this reasonableness analysis: (1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; CT Page 13351-ld (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies. (Citations omitted; internal quotation marks omitted.) Metropolitan Life Ins. v. Robertson-CECO Corp., 84 F.3d 560, 567-68 (2d Cir.), cert. denied, 519 U.S. 1006, 117 S.Ct. 508, 136 L.Ed.2d 398 (1996); see also Chew v. Dietrich, 143 F.3d 24 (2d Cir. 1998)." Id. There is nothing in the memoranda that demonstrates an undue burden on the defendant by requiring BHCS to travel to Connecticut. To the contrary, the defendant is located in Pittsfield, Massachusetts which is proximately located to this forum. As further evidence of proximity, the Agreement required Goldstar to deliver equipment and supplies within two hours of a request by BHCS. Such a requirement would be impossible to complete if travel between the two locations was an undue burden. Second, Connecticut has a significant interest in adjudicating the dispute as the contract was drafted and, in part, executed in the state. Further, Connecticut has an interest in resolving a dispute regarding failure to pay for services rendered by a Connecticut business. With respect to the third factor, Goldstar has a clear interest in resolving the dispute and obtaining relief through the courts of Goldstar's resident state of Connecticut. Factor four is the one factor that does not necessarily support the exercise of personal jurisdiction in Connecticut as resolution might be more efficient in Massachusetts, since the Agreement is governed by, construed, and enforced by the laws of the state of Massachusetts. BHCS in its Memorandum in Support of Motion to Dismiss implies that the express statement in Paragraph 22, the Applicable Law section of the Agreement, requiring that the laws of the State of Massachusetts govern the Agreement, is dispositive on the question of jurisdiction. Case law distinguishes choice of law clauses with forum selection. See, for example, Horniatko v. Riverfront Assoc., Superior court, judicial district of Hartford at Hartford, Docket No. 4000332, (June 21, 2005, Shapiro, J.) where the court finds that ". . . in their initial sales agreement . . . [the parties] did not agree to a forum selection clause . . . [the contract] states only that the CT Page 13351-le agreement shall be governed and construed in accordance with Rhode Island law." While the applicable law section of the agreement is a factor to be considered in determining forum, it does not necessarily require that the forum be consistent with the applicable law. Finally, the fifth factor supports the exercise of personal jurisdiction over BHCS in Connecticut. All states share a social policy of satisfying contractual agreements within their borders. Considering and balancing all of those factors, it is this court's opinion that it is reasonable to and the court may exercise personal jurisdiction over BHCS.
The business relationship between Berkshire Healthcare Systems and Goldstar has created sufficient contacts with Connecticut to allow this court to exercise personal jurisdiction over the Massachusetts company under Connecticut's long-arm statutes without violating the due process requirements of the United States Constitution. Accordingly, the motion to dismiss is denied.