Western Heritage Thrift & Loan v. Cloutier

OPINION By the Court, Young, J.; Respondents leased a loader and trailer from the Case Equipment Company dealership in Reno. The dealership arranged for financing through appellant, a thrift institution located in Sandy, Utah. Respondents filled out a credit application at the Case dealership in Reno. Case sent the application to appellant, which approved the loan and sent a check to the dealership. Respondents sent their payments to Utah. Respondents subsequently defaulted on their payments. Appellant repossessed the loader and trailer and took them to Utah. Respondents corresponded with appellant in an effort to redeem the property. When these negotiations proved fruitless, appellant sold the equipment for less than the balance owed on the lease agreement. Appellant then obtained a Utah deficiency judgment. The judgment was filed with the Nevada Second Judicial District Court under the Uniform Foreign Judgments Act, NRS 17.330-17.400. Respondents moved for dismissal of the foreign judgment, alleging that the Utah court lacked jurisdiction. In granting respondents’ motion, the trial court stated; Subjecting the Cloutiers to the jurisdiction of the Utah court would be inconsistent with the due process clause of the Fourteenth Amendment. They purchased the Case loader in Nevada from a Nevada dealer to be used in Nevada, and the dealer provided financing through a Utah lending institution. There were no actual activities of any kind in the State of Utah by the defendants. This Court cannot find that the execution of the lease to finance purchase of the equipment in the State of Nevada created activities or consequences [473] substantial enough to make the exercise of jurisdiction by the State of Utah reasonable. The court then ruled that the Utah long-arm statute1 unconstitutionally exceeded the bounds of the Fourteenth Amendment Due Process Clause. While appellant is correct in stating that the district court erred in declaring the Utah long-arm statute unconstitutional, we disagree with appellant’s assertion that reasonableness should not be considered in determining the existence of specific jurisdiction. The trial court’s refusal to apply the Utah statute was correct as an “as applied” due process violation. We have previously held that, where a cause of action does not arise out of a nonresident defendant’s acts in the forum, the assertion of specific jurisdiction would be unreasonable. Munley v. District Court, 104 Nev. 492, 495, 762 P.2d 414, 416 (1988); Shapiro v. Pavlikowski, 98 Nev. 548, 550, 654 P.2d 1030, 1031 (1982). This case is controlled by the decision in Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985). In upholding the exercise of jurisdiction by a Florida court over a Michigan defendant, the Court determined that Rudzewicz had deliberately “reached out” beyond Michigan to establish a contractual relationship with a Florida corporation. 471 U.S. at 479. The Court opined that “in no sense can this relationship be viewed as ‘random,’ ‘fortuitous,’ or ‘attenuated.’ ” 471 U.S. at 475, quoted in Munley, 104 Nev. at 495, 762 P.2d at 416. Appellant has failed to establish that the respondents “reached out” to Utah when they leased their backhoe and trailer. They did business with a Reno dealership. The dealer arranged for financing with the appellant. All direct contact between appellant and respondents occurred after the financing arrangements were concluded. This type of contact approximates the “random,” “fortuitous,” or “attenuated” contact distinguished by the Court in Burger King. We therefore hold that respondents’ contacts with Utah were insufficient to support the exercise of specific jurisdiction by the Utah court. We are also mindful that dismissal of this appeal will not leave appellant without recourse to satisfy its deficiency. Appellant remains free to sue respondents in Nevada for any funds remaining due on the lease agreement. Accordingly, we hereby affirm the ruling of the district court setting aside the foreign judgment. Springer, Rose and Steffen, JJ., concur. Footnotes [1] Utah Code Ann. § 78-27-24(1) (1953 as amended).