Facts
- Continental Forest Products, Inc., an Oregon corporation, sold lumber and plywood from Oregon; White Lumber Sales, Inc. was a Florida corporation buying and selling lumber and plywood.
- White had prior purchasing dealings with Continental.
- White initiated the transaction by telephoning Continental in Oregon to request a price quotation for twenty carloads of plywood to be manufactured to White’s specifications.
- After Continental provided pricing and terms, White telephoned in a purchase order; Continental accepted and began performance through an Oregon mill, and the order was later confirmed by mail.
- The plywood was manufactured in Oregon to White’s specifications and shipped by rail to an out-of-state destination.
- A dispute arose after initial shipments regarding alleged nonconformity; Continental sued White in Oregon for the purchase price and for damages tied to plywood manufactured but not shipped and alleged breach as to the remaining carloads.
- Continental served White under Oregon’s long-arm statute provision authorizing jurisdiction for “transacting business” in Oregon.
- White specially appeared and moved to quash service for lack of personal jurisdiction; the trial judge denied the motion.
- White sought mandamus to compel the trial judge to quash service; the matter reached the Oregon Supreme Court on a demurrer to the alternative writ.
Issues
- Whether, consistent with due process, a nonresident buyer “transacted business” in Oregon under ORS 14.035(1)(a) by initiating and contracting for custom manufacture in Oregon through telephone and mail communications, where the claim arose from that contract.
- Whether mandamus should issue to require the trial judge to quash service of process for lack of personal jurisdiction.
Decision
- The Oregon Supreme Court sustained the demurrer to the alternative writ of mandamus.
- The court held that White’s Oregon-related activities constituted “transacting business” within Oregon for purposes of ORS 14.035(1)(a).
- The court concluded that exercising personal jurisdiction over White comported with federal due process because White purposefully created a substantial connection with Oregon and the suit arose from that connection.
- The court refused to order the trial judge to quash service, allowing the underlying contract action to proceed in Oregon.
Legal Principles
- Oregon’s long-arm statute is intended to extend to the maximum extent permitted by federal due process.
- Due process permits specific personal jurisdiction when a defendant has minimum contacts with the forum such that suit there is consistent with fair play and substantial justice.
- A single contract can supply sufficient contacts when the defendant purposefully initiates a substantial commercial relationship connected to forum-state performance and the litigation arises out of that relationship.
- Physical presence in the forum is not required; purposeful forum-directed conduct through communications and contractual obligations tied to in-forum performance can establish “transacting business.”
Conclusion
Oregon courts could exercise long-arm jurisdiction over an out-of-state buyer that initiated and entered a substantial, custom-manufacture purchase contract performed in Oregon, because the buyer’s purposeful contacts created a sufficient forum connection and the seller’s claims arose directly from that transaction.