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PENINSULA CRUISE, INC. v. NEW RIVER YACHT SALES, INC. (59814)


PENINSULA CRUISE, INC.

v.

NEW RIVER YACHT SALES, INC.


February 26, 1999
Record No. 980728

PENINSULA CRUISE, INC.

v.

NEW RIVER YACHT SALES, INC.

FROM THE CIRCUIT COURT OF THE CITY OF NEWPORT
NEWS

Randolph T. West, Judge
Present: All the Justices
OPINION BY JUSTICE LEROY R. HASSELL, SR.


In this appeal we consider whether the circuit
court erred in refusing to exercise personal jurisdiction over a
Florida corporation pursuant to Code Sect. 8.01-328.1, the
long-arm statute.

Peninsula Cruise, Inc., filed its amended
motion for judgment against New River Yacht Sales, Inc. The
plaintiff sought to recover, among other things, the cost of
repairs made to a sport fishing boat it had purchased from New
River Yacht Sales. The defendant filed responsive pleadings,
including a special plea which asserted that the court lacked
personal jurisdiction over it. The defendant contended that it
does not transact and has not transacted business in Virginia,
nor has it engaged in any other activity that would satisfy the
requirements of Code Sect. 8.01-328.1. The litigants agreed
to certain stipulated facts, and the circuit court held that it
lacked a "sufficient basis upon which to exercise personal
jurisdiction over the defendant in accordance with" Code
Sect. 8.01-328.1. The circuit court dismissed the action,
and the plaintiff appeals.

The following stipulated facts are relevant to
our disposition of this appeal. Edward H. Shield, president of
Peninsula Cruise, contacted the defendant’s employees regarding
the purchase of a sport fishing boat. Shortly thereafter, Shield
went to the defendant’s premises in Fort Lauderdale, Florida to
inspect the boat. Shield made arrangements to have a marine
surveyor inspect the boat in Fort Lauderdale. The parties agreed
that certain improvements and repairs to the boat were necessary.
Shield gave the defendant a check as a deposit for the boat and
returned to Virginia.

After Shield returned to Virginia, he contacted
the defendant’s employees to discuss the status of the repairs
and improvements to the boat and to make delivery arrangements.
The defendant’s employees, who were in Florida, prepared an
itemization of the repairs to be performed on the boat, fixed the
purchase price of the boat at $275,000, and identified the
delivery point for the boat as Charleston, South Carolina.

The defendant’s employees left Fort Lauderdale
with the boat en route to South Carolina. However, the boat
developed an oil leak and sustained damage to the propeller.
"For additional consideration, [the] [d]efendant agreed to
deliver the vessel all the way to Virginia."

The defendant’s employees delivered the boat to
the plaintiff in Virginia. "Thereafter, the parties spoke by
telephone while [p]laintiff was in Virginia and [d]efendant was
in Florida, and [d]efendant advised [p]laintiff that it should
have the necessary repair work done and forward copies of repair
invoices to the [d]efendant for consideration for reimbursement.
The repair work was done in Virginia."

Code Sect. 8.01-328.1(A) states in part
that "[a] court may exercise personal jurisdiction over a
person, who acts directly or by an agent, as to a cause of action
arising from the person’s . . . 1. [t]ransacting any
business in this Commonwealth . . . ." The
plaintiff contends that the circuit court erred in failing to
exercise personal jurisdiction over the defendant because the
defendant transacted business in Virginia pursuant to Code
Sect. 8.01-328.1(A)(1), and that the defendant had
sufficient contacts with Virginia to satisfy the requirements of
due process. The defendant, however, asserts that its delivery of
the boat to Virginia does not constitute "transacting
business" within the meaning of the long-arm statute, and
that it did not have sufficient contacts with Virginia to satisfy
the requirements of due process.

We have stated that "[i]t is manifest that
the purpose of Virginia’s long arm statute is to assert
jurisdiction over nonresidents who engage in some purposeful
activity in this State to the extent permissible under the due
process clause." John G. Kolbe, Inc. v. Chromodern
Chair Co., Inc.
, 211 Va. 736, 740, 180 S.E.2d 664, 667
(1971); accord Krantz v. Air Line Pilots Assoc.,
245 Va. 202, 205, 427 S.E.2d 326, 328 (1993); Nan Ya Plastics
Corp.
v. DeSantis, 237 Va. 255, 259, 377 S.E.2d 388,
391, cert. denied, 492 U.S. 921 (1989); Carmichael
v. Snyder, 209 Va. 451, 456, 164 S.E.2d 703, 707 (1968).
We have held that Code Sect. 8.01-328.1 "is a
single-act statute requiring only one transaction in Virginia to
confer jurisdiction on our courts." Nan Ya Plastics Corp.,
237 Va. at 260, 377 S.E.2d at 391; I.T. Sales, Inc. v. Dry,
222 Va. 6, 9, 278 S.E.2d 789, 790 (1981); John G. Kolbe, Inc.,
211 Va. at 740, 180 S.E.2d at 667.

The Due Process Clause of the Fourteenth
Amendment to the federal constitution protects a person’s liberty
interest in not being subject to the binding judgment of a forum
unless that person has certain minimum contacts within the
territory of the forum so that maintenance of an action against
that person does not offend "traditional notions of fair
play and substantial justice." International Shoe Co.
v. Washington, 326 U.S. 310, 316 (1945). See Burger
King Corp.
v. Rudzewicz, 471 U.S. 462, 471-72 (1985).
The circumstances of each case must be examined to ascertain
whether the requisite minimum contacts are present. Kulko
v. California Superior Court, 436 U.S. 84, 92 (1978); Witt
v. Reynolds Metals Co., 240 Va. 452, 454, 397 S.E.2d 873,
875 (1990).

In World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 291-92 (1980), the United States Supreme Court
discussed the limitations that the Due Process Clause imposes
upon the power of a state court to render a valid personal
judgment against a non-resident defendant:

"As has long been settled
. . . a state court may exercise personal
jurisdiction over a nonresident defendant only so long as
there exist ‘minimum contacts’ between the defendant and
the forum State. . . . The concept of
minimum contacts, in turn, can be seen to perform two
related, but distinguishable, functions. It protects the
defendant against the burdens of litigating in a distant
or inconvenient forum. And it acts to ensure that the
States, through their courts, do not reach out beyond the
limits imposed on them by their status as coequal
sovereigns in a federal system.

The protection against inconvenient
litigation is typically described in terms of
‘reasonableness’ or ‘fairness.’ We have said that the
defendant’s contacts with the forum State must be such
that maintenance of the suit ‘does not offend traditional
notions of fair play and substantial justice.’
 . . . The relationship between the
defendant and the forum must be such that it is
‘reasonable . . . to require the corporation to
defend the particular suit which is brought there.’
. . . Implicit in this emphasis on
reasonableness is the understanding that the burden on
the defendant, while always a primary concern, will in an
appropriate case be considered in light of other relevant
factors, including the forum State’s interest in
adjudicating the dispute . . . ."

The Supreme Court observed that "[t]he
limits imposed on state jurisdiction by the Due Process Clause,
in its role as guarantor against inconvenient litigation, have
been substantially relaxed over the years. . . .
[T]his trend is largely attributable to a fundamental
transformation in the American economy." Id. at
292-93. Explaining the reason for this expansion in the
permissible scope of state jurisdiction over foreign corporations
and other non-residents, the Supreme Court stated:

"Today many commercial
transactions touch two or more States and may involve
parties separated by the full continent. With this
increasing nationalization of commerce has come a great
increase in the amount of business conducted by mail
across state lines. At the same time modern
transportation and communication have made it much less
burdensome for a party sued to defend himself in a State
where he engages in economic activity." McGee
v. International Life Ins. Co., 355 U.S. 220,
222-23 (1957).

Accord World-Wide Volkswagen Corp.,
444 U.S. at 293; Hanson v. Denckla, 357 U.S. 235,
250-51 (1958).

We hold that Code Sect. 8.01-328.1(A)
authorized the circuit court to exercise personal jurisdiction
over the defendant. The defendant transacted business in this
Commonwealth within the meaning of the long-arm statute. Even
though the defendant had initially agreed to deliver the boat to
South Carolina, the defendant was paid additional consideration
to deliver the vessel to Virginia. The defendant’s employees
physically transported the boat within Virginia’s boundaries and
delivered the boat to the plaintiff in Virginia. The defendant’s
employees had telephone conversations with the plaintiff,
discussed the status of repairs and improvements to the boat,
and, after the defendant’s employees had physically transported
the boat to Virginia, the "[d]efendant advised [p]laintiff
that it should have the necessary repair work done and forward
copies of repair invoices to the [d]efendant for consideration
for reimbursement." The repair work was performed in
Virginia.

We conclude that the defendant, by taking these
actions, purposefully availed itself of the privilege of
conducting activities within this Commonwealth, thereby invoking
the benefits and protections of Virginia’s laws. Maintenance of
this action in Virginia "does not offend traditional notions
of fair play and substantial justice" because the defendant,
through its purposeful acts, had sufficient contacts with this
Commonwealth. The defendant’s contacts with this Commonwealth
make it reasonable for the defendant to be required to defend the
plaintiff’s action in this State.

We reject the defendant’s contention that our
decision in Danville Plywood Corp. v. Plain and Fancy
Kitchens, Inc.
, 218 Va. 533, 238 S.E.2d 800 (1977), compels a
different result. In Danville Plywood Corp., we held that
the long-arm statute did not grant a circuit court personal
jurisdiction over a non-resident defendant. Danville Plywood, a
Virginia corporation which operated a manufacturing plant in
Danville, sold plywood panels to Plain and Fancy Kitchens, Inc.
(Kitchens), a foreign corporation. Kitchens operated a
manufacturing facility in Pennsylvania. Danville Plywood’s
representative in Pennsylvania solicited a sales order from
Kitchens. As a result of the solicitation, Kitchens placed an
order with Danville Plywood for more than 500 plywood panels to
be shipped, F.O.B. Danville, to Kitchens. Danville Plywood
delivered the panels to a common carrier which transported them
to Kitchens’ facility in Pennsylvania. Kitchens refused to pay
for the materials, alleging that some of the panels were
defective. Danville Plywood filed an action in Virginia. Id.
at 534, 238 S.E.2d at 801-02.

We held that the long-arm statute did not
permit the circuit court to exercise personal jurisdiction over
Kitchens because Danville Plywood failed to establish that
Kitchens had sufficient contacts in Virginia to satisfy the
requirements of due process. We also pointed out that
"[w]hile the risk of loss of panels shipped F.O.B. Danville
passed from Plywood to Kitchens when the panels were placed in
the possession of the common carrier at Danville . . .
and while technical acceptance of the order may have occurred in
Virginia by Plywood’s delivery of the panels to the carrier, this
evidence is insufficient to establish that Kitchens had the
necessary ‘minimum contacts’ . . . ." Danville
Plywood Corp.
, 218 Va. at 535, 238 S.E.2d at 802.

Here, unlike the facts in Danville Plywood
Corp.
, the defendant, through its purposeful conduct, did
have the necessary minimum contacts. As we have already stated,
the defendant was paid additional consideration to perform in
Virginia a portion of its contract with the plaintiff. The
defendant performed its contractual obligations in part by
delivering the vessel in this Commonwealth.

Accordingly, we will reverse the judgment of
the circuit court and remand this case for further proceedings.

Reversed and remanded.

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