Frank L. SANCHEZ and Joanne Sanchez, Plaintiffs-Appellants,
v.
The CHURCH OF SCIENTOLOGY OF ORANGE COUNTY, Defendant-Appellee.
No. 20839.
Supreme Court of New Mexico.
June 23, 1993.
Rehearing Denied July 28, 1993.
Plaintiffs filed action against church and management training company for
violation of Unfair Practices Act, breach of contract, intentional infliction
of emotional distress, and civil conspiracy. The District Court, San Miguel
County, Art Encinias, D.J., granted church's motion to dismiss for lack of
personal jurisdiction. Plaintiffs appealed. The Supreme Court, Franchini, J.,
held that: (1) church had not engaged in activities enumerated within long-arm
statute and had not established minimum contacts with state, and thus was not
subject to personal jurisdiction in state; (2) plaintiffs were not entitled to
oral hearing on motion to dismiss; and (3) district court was within its
discretion in refusing to stay its ruling pending additional discovery.
Affirmed.
[1] APPEAL AND ERROR
Because issue of whether dismissing case on personal jurisdiction grounds
without hearing deprived plaintiffs of jury trial on that issue had not been
raised before trial court, it was not properly preserved for review on appeal.
[2] CONSTITUTIONAL LAW
In determining whether personal jurisdiction exists over out-of-state
nonresident defendant, Supreme Court examines whether defendant's acts are
enumerated in long-arm statute, plaintiff's cause of action arises from the
acts, and minimum contacts necessary to satisfy due process are established by
defendant's acts. NMSA 1978, s 38-1-16; U.S.C.A. Const.Amend. 14.
[2] COURTS
In determining whether personal jurisdiction exists over out-of-state
nonresident defendant, Supreme Court examines whether defendant's acts are
enumerated in long-arm statute, plaintiff's cause of action arises from the
acts, and minimum contacts necessary to satisfy due process are established by
defendant's acts. NMSA 1978, s 38-1-16; U.S.C.A. Const.Amend. 14.
[2] COURTS
In determining whether personal jurisdiction exists over out-of-state
nonresident defendant, Supreme Court examines whether defendant's acts are
enumerated in long-arm statute, plaintiff's cause of action arises from the
acts, and minimum contacts necessary to satisfy due process are established by
defendant's acts. NMSA 1978, s 38-1-16; U.S.C.A. Const.Amend. 14.
[3] COURTS
Allegations that church and management training company were engaged in civil
conspiracy in state, and that company was agent of church were insufficient to
establish that church "transacted business" within state so as to subject it
to personal jurisdiction there, where affidavit of church's president
established separateness of the corporate entities, lack of employee or agency
relationship between church and company, and denial of conspiracy. NMSA
1978, s 38-1-16; U.S.C.A. Const.Amend. 14.
See publication Words and Phrases for other judicial constructions and
definitions.
[4] COURTS
Church had not committed tort of intentional infliction of emotional distress
within state, so as to subject it to personal jurisdiction there; where church
presented affidavits denying that they attempted to contact plaintiffs within
state by calling them over 200 times and with two personal visits, and church
claimed instead that its contact with plaintiffs consisted of several phone
calls and mailings and two unsuccessful attempts by agent of church to
contact them. NMSA 1978, s 38-1-16; U.S.C.A. Const.Amend. 14.
[5] COURTS
Church did not have sufficient minimum contacts with state to subject it to
personal jurisdiction there, where church attempted to contact plaintiffs
personally within state two times, but were unsuccessful, and remaining
contacts with plaintiffs were limited to use of mail and telephone.
U.S.C.A. Const.Amend. 14.
[6] CONSTITUTIONAL LAW
To determine whether "minimum contacts" have been established, such that
personal jurisdiction may constitutionally be asserted, Supreme Court looks at
degree to which defendant purposefully initiated its activity within state.
U.S.C.A. Const.Amend. 14.
[6] COURTS
To determine whether "minimum contacts" have been established, such that
personal jurisdiction may constitutionally be asserted, Supreme Court looks at
degree to which defendant purposefully initiated its activity within state.
U.S.C.A. Const.Amend. 14.
[7] COURTS
Activity which may subject defendant to personal jurisdiction within forum
state consists of some act by which defendant purposefully avails itself of
privilege of conducting activities within state, thus invoking benefits and
protections of its law. U.S.C.A. Const.Amend. 14.
[8] COURTS
Civil defendant will not be subject to personal jurisdiction solely as result
of random, fortuitous, or attenuated contacts with forum state. U.S.C.A.
Const.Amend. 14.
[9] COURTS
Ordinarily, use of mails, telephone, or other international communications
simply do not qualify as "purposeful activity" invoking benefits and
protection of forum state for purposes of personal jurisdiction. U.S.C.A.
Const.Amend. 14.
See publication Words and Phrases for other judicial constructions and
definitions.
[10] APPEAL AND ERROR
Supreme Court analyzes motion to dismiss as summary judgment motion when
matters outside pleadings are considered.
[11] JUDGMENT
It is within district court's discretion when considering motion for summary
judgment to hold oral hearing.
[12] PRETRIAL PROCEDURE
District court was within its discretion in not holding oral hearing and in
disposing of motion to dismiss for lack of personal jurisdiction on materials
submitted, where issue of jurisdiction was fully briefed by parties, both
parties submitted sworn testimony through affidavits, plaintiffs did not
request hearing, and district court was not put on notice that any additional
evidence would be presented at motion hearings.
[13] APPEAL AND ERROR
Supreme Court reviews district court's decision limiting discovery solely on
grounds of abuse of discretion.
[14] PRETRIAL PROCEDURE
District court was within its discretion in refusing to stay its ruling on
motion to dismiss for lack of personal jurisdiction pending additional
discovery, where plaintiffs had seven months from filing of complaint until
court's ruling in which to conduct discovery to support their jurisdictional
allegations.
**772 *661 Civerolo, Wolf, Gralow & Hill, Roberto C. Armijo, Albuquerque,
for plaintiffs-appellants.
White, Koch, Kelly & McCarthy, Janet E. Clow, Karen Kilgore, Santa Fe, for
defendant-appellee.
OPINION
FRANCHINI, Justice.
Frank and Joanne Sanchez filed an action in district court to recover
damages for violation of the New Mexico Unfair Practices Act, for breach of
contract, for intentional infliction of emotional distress, for injunctive
relief, for breach of covenant of good faith and fair dealings, for civil
conspiracy, and for tort. The Church of Scientology of Orange County (Church)
was one **773 *662 of four named defendants. The Church moved to dismiss
for lack of jurisdiction. The district court granted the Church's motion. The
Sanchezes appeal. We affirm.
I.
This case stems from the Sanchezes' involvement in a series of management
training courses. Initially, they were impressed with defendant Sterling
Management Systems (Sterling) and agreed to attend classes at Sterling's
training facility in California. Upon advice of Sterling's representatives,
the Sanchezes obtained additional training from the Scientology and Dianetics
Center (Center), also located in California and operated by the Church. They
became dissatisfied with the management consulting training and thereafter
chose to disassociate with the defendants, to repudiate their agreements, and
to return from the Center to New Mexico. After returning from California, a
Church agent attempted to contact the Sanchezes, and up to two hundred mailings
were sent to them from various defendants. They filed their complaint on
December 30, 1991.
On April 13, 1992, the Church filed a motion to dismiss the claim, challenging
the personal jurisdiction of the New Mexico court over the Church under the
long-arm statute. See NMSA 1978, s 38-1-16 (Repl.Pamp.1987). The motion
was supported by an affidavit from the Secretary of the Church stating that:
the Church is a nonprofit corporation located in Tustin, California; the
Church does not have now, nor has it ever had, an office established or
operating in New Mexico; all physical contacts between the Sanchezes and the
Church occurred in California; all services, interviews, and consultations
rendered by the Church occurred in California and; a few letters were sent and
a few phone calls were made to the Sanchezes in New Mexico.
In response, the Sanchezes attached several affidavits describing their
ordeal. One incident involved a counselor from the Center who attempted to
contact them in New Mexico after their relationship with the Church was
terminated. Also, a check for $120,000, made out in blank by Frank Sanchez,
was presented by the Church to his bank in New Mexico for payment. At Frank
Sanchez's direction, the check was not honored.
The Church's reply included an affidavit by its president, John Woodruff,
which essentially denied any corporate connection or relationship between the
Church and Sterling. He denied that the Church controlled any activities of
Sterling or conspired or participated with Sterling with respect to Sterling's
contacts with the Sanchezes. Finally, he stated that it was only after the
Sanchezes arrived in California to attend a seminar given by Sterling that the
Church became aware of their existence or had any contact with them.
The district court granted the motion to dismiss on July 27, 1992. The
Sanchezes filed a motion to reconsider and to allow them to present argument
and evidence. This motion was denied, and the order dismissing the complaint
for lack of jurisdiction was filed on August 17, 1992.
II.
[1] The main issue before us is whether the acts of the Church warrant the
exercise of personal jurisdiction over the Church by New Mexico. We also
decide whether the district court erred by not conducting a hearing on the
motion to dismiss or by not staying its ruling on the motion pending further
discovery. We do not address the Sanchezes' contention that granting the
motion to dismiss deprived them of a right to trial by jury on this issue.
Because they did not raise this issue to the district court, it was not
properly preserved for review on appeal. See Beneficial Fin. Co. v.
Alarcon, 112 N.M. 420, 424, 816 P.2d 489, 493 (1991).
[2] The long-arm statute sets out five different acts, which if conducted in
our state, and if any cause of action arises from such act, submit the actor to
the jurisdiction of our courts. NMSA 1978, s 38-1-16 (Repl.Pamp.1987). The
pertinent acts here are the transaction of any business or the commission of a
tort within **774 *663 this state. To determine whether personal
jurisdiction exists over an out-of-state nonresident defendant, we apply the
following three-step test: Whether, (1) defendant's acts are enumerated in the
long-arm statute; (2) plaintiff's cause of action arises from the acts; and
(3) minimum contacts necessary to satisfy due process are established by
defendant's acts. See State Farm Mut. Ins. Co. v. Conyers, 109 N.M. 243,
244, 784 P.2d 986, 987 (1989); Salas v. Homestake Enter., Inc., 106 N.M.
344, 345, 742 P.2d 1049, 1050 (1987).
The Sanchezes claim that the Church "transacted business" in New Mexico. They
support this argument with allegations from their complaint that co-defendant
Sterling was an agent and employee of the Church, and thus its acts should be
imputed to the Church. The Sanchezes also suggest that the activities of
Sterling are attributable to the Church because they have alleged a civil
conspiracy.
It is the acts of the Church and not the acts of Sterling that must provide
the basis for personal jurisdiction over the Church. See Visarraga v. Gates
Rubber Co., 104 N.M. 143, 147, 717 P.2d 596, 600 (Ct.App.), cert. quashed,
104 N.M. 137, 717 P.2d 590 (1986). In Allen v. Toshiba Corp., 599
F.Supp. 381 (D.N.M.1984), an issue addressed by the court was whether TAI, a
subsidiary corporation which admittedly was subject to jurisdiction in New
Mexico, was the agent or alter ego of Toshiba, the parent corporation, so as to
render Toshiba subject to jurisdiction under New Mexico's long-arm statute.
The allegation that TAI was acting as Toshiba's agent was controverted by an
opposing affidavit setting forth facts similar to those in the Church's
affidavit. The court noted that when the alleged jurisdictional basis was
controverted, plaintiff had to sustain the burden of proof on the
jurisdictional issue. Id. at 387. Because plaintiff failed to sustain that
burden, the court granted the defendant's motion to dismiss for lack of
personal jurisdiction. Similarly, here, where there is no parent-subsidiary
relationship, the Sanchezes failed to sustain their burden on the agency
theory.
The case of American Land Program, Inc. v. Bonaventura Uitgevers
Maatschappij, 710 F.2d 1449 (10th Cir.1983), is also instructive to our
analysis. Applying the Utah long-arm statute, Utah Code Ann. Section 78-27-
24 (1977), the Tenth Circuit decided various personal jurisdiction issues. In
particular, the court examined whether one conspirator's acts were "sufficient
to establish personal jurisdiction over [the other] nonresident
coconspirators." Bonaventura, 710 F.2d at 1454. In Bonaventura, the
plaintiff alleged conspiracy and defendants countered by sworn affidavits that
no conspiracy existed. Plaintiff did not contravene defendants' affidavits,
and the court determined that the threshold burden of establishing personal
jurisdiction was not met. Id. " 'Mere allegations of conspiracy, without
some sort of prima facie factual showing of a conspiracy, cannot be the basis
of personal jurisdiction of co-conspirators outside the territorial limits of
the court.' " Id. (quoting Baldridge v. McPike, Inc., 466 F.2d 65, 68
(10th Cir.1972)).
[3] We hold that the Church properly and adequately challenged the
Sanchezes' prima facie jurisdictional allegations by submitting Woodruff's
affidavit. That affidavit established the separateness of the corporate
entities, the lack of an employee or agency relationship between the Church and
Sterling, and the denial of a conspiracy. Therefore, the Sanchezes had the
burden of proving the jurisdictional allegations, and the record does not
reveal proof of the jurisdictional allegations contained in the complaint.
See State ex rel. Anaya v. Columbia Research Corp., 92 N.M. 104, 105, 583
P.2d 468, 469 (1978). We hold that the Church did not "transact business" in
New Mexico and therefore this requirement of the long-arm statute is not
satisfied. Our courts lack personal jurisdiction over the Church on this
claim.
[4] The Sanchezes also claim that the Church committed a tortious act within
the state. Section 38-1-16. The acts complained of were attempts by Church
agents to contact the Sanchezes after they returned to New Mexico through phone
calls, **775 *664 over 200 mailings, and two personal visits. The
Sanchezes alleged that these actions gave rise to a claim for intentional
infliction of emotional distress.
The Sanchezes failed to sustain their burden on this jurisdictional issue as
well. The Church controverted the Sanchezes' affidavits. The Church's
affidavits support the following acts by the Church: several phone calls and
mailings and two unsuccessful attempts by an agent of the Church to contact
them. These acts, taken alone, are not enough to support the commission of a
tort within this State, especially a tort in which extreme and outrageous
conduct is a key element. See Dominguez v. Stone, 97 N.M. 211, 214, 638
P.2d 423, 426 (Ct.App.1981). These acts, at most, amount to indignations and
annoyances. The Sanchezes' affidavits state that they were personally offended
and angered by the communications. The mailings and communications caused Mrs.
Sanchez "anxiety, fear and worry" because her receipt of the materials reminded
her of the California experience. The New Mexico conduct alleged was not
" 'beyond all possible bounds of decency, and to be regarded as atrocious, and
utterly intolerable in a civilized community.' " Id.
[5][6][7][8][9] Finally, the Church does not have sufficient minimum
contacts with New Mexico, and maintaining a suit here would offend
" 'traditional notions of fair play and substantial justice.' "
International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158,
90 L.Ed. 95 (1945) (citations omitted). To determine whether "minimum
contacts" were established, we look at the "degree to which defendant
purposefully initiated its activity within the State". Customwood Mfg.,
Inc. v. Downey Constr. Co., 102 N.M. 56, 57, 691 P.2d 57, 58 (1984). The
activity consists of some act by which the defendant "purposefully avails
itself of the privilege of conducting activities within the forum State, thus
invoking the benefits and protections of its law." Valley Wide Health
Servs., Inc. v. Graham, 106 N.M. 71, 73, 738 P.2d 1316, 1318 (1987) (emphasis
omitted) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239,
2 L.Ed.2d 1283 (1958)). The purposeful activity requirement assumes that a
defendant will not be subject to jurisdiction solely as a result of random,
fortuitous, or attenuated contacts. We agree with the Ninth Circuit "that
ordinarily 'use of the mails, telephone, or other international communications
simply do not qualify as purposeful activity invoking the benefits and
protection of the [forum] state.' " Peterson v. Kennedy, 771 F.2d 1244,
1262 (9th Cir.1985) (citations omitted), cert. denied, 475 U.S. 1122, 106
S.Ct. 1642, 90 L.Ed.2d 187 (1986). Furthermore, it would offend our conception
of fair play and substantial justice to subject the Church to suit for
unsuccessfully attempting to contact the Sanchezes on two occasions. The
complaint and its supporting affidavits do not allege sufficient "minimum
contacts" to allow the exercise of extraterritorial jurisdiction over the
Church consistent with the Due Process Clause.
[10][11][12] The Sanchezes next argue that they were wrongly denied a
hearing on the Church's motion to dismiss. We analyze a motion to dismiss as a
summary judgment motion when matters outside the pleadings are considered.
See Boyd v. Permian Servicing Co., 113 N.M. 321, 322, 825 P.2d 611, 612
(1992). It is within the district court's discretion when considering a motion
for summary judgment to hold an oral hearing. See National Excess Ins. Co.
v. Bingham, 106 N.M. 325, 327, 742 P.2d 537, 539 (Ct.App.1987). Here, the
issue of personal jurisdiction was fully briefed by both parties, and both the
Sanchezes and the Church submitted sworn testimony through affidavits.
Although there were two requests for hearings on the motion, both requests were
made by the Church, and the record is void of information that the district
court was put on notice that any additional evidence would be presented at the
motion hearings. The district court was within its discretion by disposing of
the motion on the materials submitted. See id.; cf. Nolan v. de Baca,
603 F.2d 810, 812 (10th Cir.1979) (holding no abuse of discretion under federal
rules where oral argument was denied), **776 *665 cert. denied, 446
U.S. 956, 100 S.Ct. 2927, 64 L.Ed.2d 814 (1980).
[13][14] The Sanchezes finally contend that the district court
wrongfully refused to permit them to pursue discovery. Contrary to their
contention, our reading of the record shows only a denial of a request for stay
of decision pending discovery. Nevertheless, we review a district court's
decision limiting discovery solely on the grounds of abuse of discretion.
Roberts v. Piper Aircraft Corp., 100 N.M. 363, 368, 670 P.2d 974, 979
(Ct.App.1983). As the district court noted, "[t]he opportunity for discovery
has always existed since the inception of this case." The Sanchezes were free
to conduct discovery, if necessary, to support their jurisdictional allegations
up until the time of the court's ruling. Considering that the complaint was
filed on December 30, 1991, regarding events which occurred in October through
December 1989, and the court's order was entered on July 27, 1992, the
Sanchezes had ample time to conduct discovery. The district court did not
abuse its discretion by refusing to stay its ruling pending additional
discovery.
In view of the foregoing, the decision of the district court granting the
Church's motion to dismiss is affirmed.
IT IS SO ORDERED.
RANSOM, C.J., and FROST, J., concur.