# Petition for Writ of Certiorari — Limon v. Kansas

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2003
- **Citation:** 539 U.S. 955

## Text

SU Ue

‘ 6 COUT,
FILED

(1) 02 858 DEC 2 2002

i
OFFICE OF THE CLERK

: | In The
Supreme Court of the Anited States

¢

THOMAS CACCIOLA, et ux., et al.,

Petitioners,

SIMS COMMUNICATIONS, INC., et al.,

Respondents.

2
Vv

On Petition For A Writ Of Certiorari To The
Court Of Appeals, State Of Washington, Division I

‘o
v

PETITION FOR A WRIT OF CERTIORARI

2
v

JOHN M. KEEFE

Counsel of Record

1120 Fremont Avenue
South Pasadena, CA 91030
(626) 441-3263

Counsel for Petitioners

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COCKLE LAW BRIEF PRINTING CO. (800) 225-6964
OR CALL COLLECT (402) 342-2831

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QUESTIONS PRESENTED

1. Does the Washington Supreme Court’s order of
September 4, 2002, constitute a final judgment under 28
U.S.C. § 1257, where petitioners have no functional defenses
to entry of a substantial judgment in the absence of their
federal claims that in personam jurisdiction may be
exercised over a Washington qualified foreign corporation
whose rich contacts with the forum are constitutionally
sufficient to satisfy the Due Process Clause of the Four-
teenth Amendment, and where the state courts have
finally adjudicated the issues of in personam jurisdiction
and under the Securities Act of 1933, as it relates to the
dismissal of these claims.

2. Whether Washington constitutionally may exer-
cise in personam jurisdiction under the Due Process
Clause of the Fourteenth Amendment over a Delaware
corporation that was doing business in Washington for a
year-and-a-half, was registered to transact business in the
state, maintained a registered agent in the forum for
service of process, and was subject under an agreement
with petitioners to a choice-of-forum provision in Washing-
ton.

3. Whether the capricious dismissal of the Securities
Act of 1933 as a theory of relief in this case, and the
present inability of petitioners to assert their claims under
Rule 144 because of the dismissal of the 1933 Act by the
state courts, has deprived petitioners of due process of law
guaranteed by the Fourteenth Amendment.

————————_— =

ii

PARTIES TO PROCEEDINGS

The following list identifies all parties to the proceed-
ings in the Washington Supreme Court:
Thomas Cacciola & Marlene Cacciola

Peter Vetrano & Lena Vetrano

SIMS Communications, Inc., James Caprio,
Melvin Leiner, Darren M. Marks

iii

CONCLUSION ......... tactesseeneesnceessnsesscsossssessseassessenees

TABLE OF CONTENTS
Page
ME RIOT bid civccinvcssscsvcdsrccuessvceceocsccsciventees 1
I ss . ssahalameheenbocnntannedeneouanses 1
STATUTES AND CONSTITUTIONAL PROVI-
ESO I EP os cvcnddnavccchsbbosidepstessasdencageonseers 1
BPE IE 0 GE EAs CARRIED ec cceuscccccscsesccesceccsoeseces 1
I ek ac pesginihapacouanebaenneyees 1
SRE ELAN IEEE DROS CALS
Decisions on Appeal ................sssssssscssescseseeseeseeseees 4
REASONS FOR GRANTING THE PETITION ......... 6
I. THE DECISION OF THE WASHINGTON
COURT OF APPEALS IS REVIEWABLE BY
THIS COURT PURSUANT TO 28 U.S.C.
§ 1257(a), UNDER THIS COURTS DECI-
SION IN COX BROADCASTING CORP. v.
CE, 480 UG. SSB CIGD) occ ssccicvescessccsencezes 7
Il. THE DECISION RAISES IMPORTANT
QUESTIONS OF FEDERAL CONSTITU-
TIONAL LAW, AND CONFLICTS WITH
THE REASONING OF THIS COURT'S DE-
CISIONS IN THE HELICOPTEROS, PER-
KINS, NEIRBO, BURGER KING, AND
BY GRD oars sncciidedepatatiiiochevinieodsneddeees 11
Ill. THE DECISION RAISES IMPORTANT
QUESTIONS OF FEDERAL LAW, AND
CONFLICTS WITH THE REASONING OF
THIS COURTS DUE PROCESS DECI-
SIONS IN THE RICHARDS, LOGAN, BELL,
PEED BORER Ey CIOS siiciknccisisarocvevecoecessovesenes 25
30

iv

TABLE OF AUTHORITIES
Page
CASES
Amalgamet, Inc. v. Ledoux & Co., 645 F.Supp. 248

CFs te I Gichcicssisshacticrpniadseadld nie Lanntenbiasibhcdiesenpinniainegniiegs 18
American Motorists Ins. Co. v. Starnes, 425 U.S.

iii inert sescaaesiattchns ential ticidiaiiahcininitaieiaininteinadacntaaad 7
Armstrong v. Manzo, 380 U.S. 545 (1965).............cssscssseees 30
Asahi Metal Industry Co. v. Superior Court, 480

Ta Se Ie Psiitciccda <cssaitnsciantecantaiezonsinnioneses 11, 19, 20, 24
Bane v. Netlink, Inc., 925 F.2d 637 (3d Cir. 1991)............. 18
Banton v. Opryland, U.S.A, Inc., 53 Wn. App. 409,

FOE Fee SD tdiceoncecthciinincdenecthentnisidnentiinass 13, 15, 16
Bell v. Burson, 402 U.S. 535 (1971)..............cccceeeeeeees passim
Boddie v. Connecticut, 401 U.S. 371 (1971)......... 5, 6, 27, 30
Burger King Corp. v. Rudzewicz, 471 U.S. 462

[Fie is+ ssixetinsteipssienescctensnicsiccesenibadmdintduaamsnennaadckoindontaaten passim
Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585

CHIE AD: snitaseciiebicoeenincinencsiiiasinesbadpianientiincntelaasecaiants passim
Celotex Corp. v. Catrett, 477 U.S. 317 (1986) ................00 29
Chan v. Society Expeditions, Inc., 39 F.3d 1398 (9th

COE ROG cvicewvscccclascdaesosccineecsbingeactbacteiahittbabanes 3, 5, 24
Conner v. Conticarriers and Terminals, 944 S.W.2d

MID CO RII, FD vrevincsscicviansticccnskapendibicbsbsonenseiiees 18
Cowan v. Ford Motor Co., 694 F.2d 104 (5th Cir.

1982), question certified on reh’g, 713 F.2d 100

(5th Cir.), rev’d & action remanded, 719 F.2d 785

CE SO ID sceccanoncinienitiscidtitiinndisaaiietbiabcatbiiteinisinicnacene 18

v
TABLE OF AUTHORITIES — Continued
| Page
Cox Broadcasting Corp. v. Cohn, 420 U.S. 469

a a iscavininitissdnntaptnisstinninsrsinininiiaeimdiiiinnns 6, 7, 8, 9, 10
Crosfield Hastech, Inc. v. Harris Corp., 672 F.Supp.

a ED iaiiasetsihosninincanvisentnciecnecendniubiebeaneneiesins 18
Crose v. Volkswagenwerk Aktiengesellschaft, 88

Wn. 2d 50, GES PB 764 (1977)......ccccresessccsserocsccsoscsososees 12
Deutsch v. West Coast Mach. Co., 80 Wn.2d 707, 497

TG SEE 0 eI i snicordh schinnihsarsiinantbacéedbihenigiaietbpiennionietantenenn 19
Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989)......... 9
Fischman v. Fischman, 470 F.Supp. 980 (E.D. Pa.

TIE visitiisinnnasiepecssititcilaiihtdeisisibaadliah itches vianimpmabiannpseiieien 18
Florida v. Thomas, 532 U.S. 774 (2001)............cssssceseseseeees 9
Freeman v. Dist. Ct., 1 P.3d 963 (Nev. 2000) ...................4 18
Goodyear Tire v. Ruby, 312 Md. 413, 540 A.2d 482

COE, BO Soncciascteceenatcncdpcepiletasacbsadidntaabiotedeneiciaedsonaiocs 18
Hanson v. Denckla, 357 U.S. 235 (1958) ..............cccceeeeeeees 19
Hartley v. American Bridge League, 61 Wn. App.

EN, BEE FE Fare CRO cvsclecoiceviccscciversctscncesceuse 13, 15, 16
Helicopteros Nacionales de Columbia, S.A. v. Hall,

BD Ws GO Cae ovncs snvicscactecncbivinsbcsvtbecnss 5, 6, 11, 15, 17
Hewitt v. Hewitt, 78 Wn. App. 447, 896 P.2d 1312

Ei icccssiuacaciasasvceeccsinanecdstissicbivchsdeabacscintpetctebiasonmamccnbbte 8
Holloway v. Wright & Morrissey, Inc., 739 F.2d 695

ERIE Mai PUIG R ccsastvecsssbolclewestcepnincocscbsnetcassiocinbbberettiesés 18, 19
Honda Motor Co. v. Oberg, 512 U.S. 415 (1994).............0. 30 -
Honey v. Davis, 131 Wn.2d 212, 930 P.2d 908 (1997)........ 29

‘

vi

TABLE OF AUTHORITIES — Continued

Page
Insurance Corp. v. Compagnie des Bauxites, 456

Tes Re CI sai sccckctiesceisscsccnessccnivinnnsttnenentevethidtstbiniion 21
International Shoe Co. v. Washington, 326 U.S. 310

CRUG Diss sedeepiciiiccersenssepsvesscees onmensinemaabashtvabebuatnissichiakin passim
Kulko v. Superior Court, 436 U.S. 84 (1978)... 15
Kyle v. Days Inn-of America, Inc., 550 F.Supp. 368

CRE DD, 270. TIGRD vcesccessstncescecigachadscarelinbasuaetabaisinaiatiieesbtas 18
Kysar v. Lambert, 76 Wn. App. 470, 887 P.2d 431

(Div. ID), rev. denied, 126 Wn.2d 1019 (1995) .............0 21
LaCorte Elec. Const. v. Centron Sec. Systems, Inc.,

894 F. Supp. 80 (N.D.N.Y. 1995) ........sccccccccssssssssececeeesees 18 ,
Litho Color, Inc. v. Pac. Employers Ins. Co., 98 Wn.

App. 286, 991 P.2d 638 (1999)...............cccssssssesseesessees 5, 26
Logan v. Zimmerman Brush Co., 455 U.S: 422

(TIPU): <i vsbennsdicazescccoesinaisnsecunscsbysonessnuibubeenaeabaibniantuted passim
Market Street R. Co. v. Railroad Comm’n of Cal.,

BOG Tie: BCG vs cite cicacciiclscdismenpienrenanstsesinbicsnsenven 7
Martinez v. California, 444 U.S. 277 (1980)..............e0eee 29
Metropolitan Life Ins. Co. v. Robertson-Ceco Corp.,

84 F.3d 560 (2nd Cir.) cert. denied, 519 U.S. 1006

CR iivcksssscosdesiacccciainceceisnssancbeuaibeniganledenaabanlnmesiaabetanoes 18
Mittelstadt v. Rouzer, 213 Neb. 178, 328 N.W.2d 467

CR Ris snlasossvitpncensienapulveceobvuisatathiehonbiebsidoveisbastubsouiacbanene 18
Mills v. Alabama, 384 U.S. 214 (1966) ............ccccsssseeeees 8,9
Mullane v. Central Hanover Bank & Trust Co., 339

Isceth AEE 1 Ai canchoviniceennennsuntancdnionsienncebantnndamans 26, 27, 30

Neirbo v. Bethlehem Corp., 308 U.S. 165 (1939) .....6, 17, 18

Vii

TABLE OF AUTHORITIES — Continued

Page
Organization for a Better Austin v. Keefe, 402 U.S.
PE CE Di ciiiiiniienensnitnsnstanahtbitlibeiiaitebpehsietinenieamminevnened 8,9
Parker v. BankAmerica Corp., 50 F.3d 757 (9th Cir.
ee eiiaincincian nities Rispseidanciabncaecaneiinestdaunbbepveenpiaciuncens 3, 5, 24
Pennsylvania Fire Ins. Co. v. Gold Issue Mining
Co., 243 U.S. 93 (1917).........eseerssssersrerssecsccsesercereees 17, 18
Pennsylvania v. Ritchie, 480 U.S. 39 (1987)..............000 7,10
Perkins v. Benguet Consolidated Mining Co., 342
ee Mae A ape Gilentnackiphninehinenisinininadsncdetistasecceciaieoteotes passim
Radio Station WOW, Inc. v. Johnson, 326 U.S. 120
Scitech ait lea ital hdisidine bcddinbebibdaiiicenadtnanbtenedatbpsstbansennees 7
Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745
SR IE TTD inchs coishdiibtableiscilebbetenednaliaangpoebennmeneggonniee 18
Raymond v. Robinson, 104 Wn. App. 627, 15 P.3d
SENET TTI ctelatiiinisdcraenntehunniantiaiinnoiaceindemse 12, 13, 15, 16
Richards v. Jefferson County, 517 U.S. 793
RE itis abiapiibliilitsiinetentidbtttivctittrcnscnserece 5, 6, 26, 30
Rosenberg Bros. & Co. v. Curtis Brown Co., 260
UB B16 (RBBB) .oceecennesrreeseeresrvcrcacosnvvererenencosecntecessesecncoses 15
Sandstrom v. Chemlawn Corp., 904 F.2d 83 (1st
SEs PEIN. carts Aesiedibbidch dicince din ceaitglipanennghbeenncbansnatioseeseneteqons 18
Schreiber v. Allis-Chalmers Corp., 611 F.2d 790
II hilt inicio id cnieianiennineiseniiniiiaaiigebiaetipameasee 18
Societe Internationale v. Rogers, 357 U.S. 197
RES SP ria it Gc ied St ER aa ak 27

Sondergard v. Miles, Inc., 985 F.2d 1389 (8th Cir.

see

TABLE OF AUTHORITIES — Continued

Page
Speck v. Mutual Serv. Life Ins. Co., 65 Ohio App.3d

SID, SSE PETE.BE GOD (IGS) wccececccrcccccescscsessccrsescseescestoeses 18
Sternberg v. O’Neal, 550 A.2d 1105 (Del. 1988)........... 18, 19
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1

ccc inictnvsscenseninchtvieyivncveccidinetaketuasuniabnetiaidniaiieal passim
Turner v. Wexler, 14 Wn. App. 143, 538 P.2d 877

(RBTE) vaiccensstsscesscesccccsdeevtesennsiptvegvisiettilitehatsncbiicsmmatatncents 24
Vogel v. Tenneco Oil Co., 276 F.Supp. 1008 (D.D.C.

BNE Virciacdekideviiiistninsinatiiviiecbcibesbinaiaalcibiubnitieaibbietbiaonsiaee 18
Voicelink Data v. Datapulse, 86 Wn. App. 613, 937

BE RI) vissitincntesnewistininieaeniishsitansisictecmuorneriers 8
Washington Equip. v. Concrete Placing, 85 Wn.

App. 240, 931 P.2d 170 (1997).............ssscsecsressssssssseesees 18
Washington v. Superior Court, 169 Wash. 688, 15
Wenche Siemer v. Learjet Acquisition Corp., 966

F.2d 179 (5th Cir. 1992), cert. denied, 506 U.S.

eR i retencittinnssttneitiinenaniinnsbisaaiinncmineje 18
Western Helicopters v. Bell Helicopter Co., 929

F.Supp. 59 (D. Puerto Rico 1996)...........ssscssssesssreesees 18
White v. Pepsico, Inc., 568 So.2d 886 (Fla. 1990) .............. 18
World-Wide Volkswagen Corp. v. Woodson, 444 U.S.

Se cthatinteteicitissicdsiniitenssdin Siéiditseintincadseervadetnciaiik 23, 24
CONSTITUTIONAL PROVISIONS, STATUTES AND RULES
UB. Geen. ; SING TF ..ceciccccesecesesncetsnstsccssecieesbitrsoneste 8
U.S. Const., Amendment V................cessscccssssssesssssssseeseees 27
U.S. Const., Amendment STD iccnicnenneeabirrdinniciainieiiine passim

ix

TABLE OF AUTHORITIES -— Continued

Page
TS UG. 6 Tea OE CBG cececececnccvcesocecccocvcvccesevccesevsccsvece passim
DTIC. B SE TIGD cccncesecccsccccssocccvecesccsoesvoconvevseecees 1, 6, 7, 10
Rule 144, 17 C.F.R. § 280.144.0000... :cscccseceeeseeseeeeeees passim
Rule 144, 17 C.F.R. § 230.144(a)(1) ........ceecesseeeereeseeneeees 28
Rule 144, 17 C.F.R. § 230.144(d)(1) ...........cesecsscerrreseeereeeeee 28
Release No. 33-5223 (January 11, 1972) [37 Fed.

OSE) ARBRE OE STE 27
Release No. 33-7390 (February 28, 1997) [62 Fed.

Rag, 9B42-48)....cccerorererecccoccccsscorcercevsvevecrccssnssescoscosevsesvees 28
Revised Code Washington 4.16.040...........::cccccssssseeeeeeeeees 23
Revised Code Washington 4.16.080......s..ssssssssssssssssssssee 23
Revised Code Washington 4.28.010(10)...........cccsessseeeeeeees 12
Revised Code Washington 4.28.185(5)..........0::sssssssssesessseees 8
Revised Code Washington 21.20 et Seq ............:sssseeeeeees 4,10
Revised Code Washington 23B.15.030 ............ccssseseseeeeeees 12
Revised Code Washington 23B.15.050(2) ...........::seseeeees 12
Washington Civil Rule-30(D\(6).............cssssseseeeeeeereeneseeees 3
Washington Civil Rule 56(C) ..........::ccccesseeeseereeeesrereeesenenes 29
OTHER AUTHORITIES
Steinberg & Kempler, The Application and Effec-

tiveness of SEC Rule 144, 49 Ohio Stat. L. Rev.

BI EE aia cedacccccsneaitcsssusreinnnsecoceovecccitosereseenionsenceresoneees 28

1

PETITION FOR A WRIT OF CERTIORARI

The petitioners hereby respectfully petition for a writ
of certiorari to review the judgment of the Court of Ap-
peals, State of Washington, Division I.

OPINIONS BELOW

The December 17, 2001, judgment of the Court of
Appeals of the State of Washington is unreported and is
reproduced in the appendix. (App., infra, pp. la-15a).

JURISDICTION

The judgment of the Supreme Court of Washington
was entered on September 4, 2002. (App., infra, 18a). The
jurisdiction of this Court is invoked under 28 U.S.C.
§ 1257(a).

STATUTES AND CONSTITUTIONAL
PROVISIONS INVOLVED

Fourteenth Amendment to the U.S. Constitution:

“No State... shall deprive any person of life,
liberty, or property, without due process of law

x**e* 7

28 U.S.C. Section 1257(a):

“Final judgments or decrees rendered by the
highest court of a State in which a decision could
be had, may be reviewed by the Supreme Court
by writ of certiorari where ... any title, right,
privilege, or immunity is specially set up or
claimed under the Constitution or the treaties or
statutes of ... the United States.”

STATEMENT OF THE CASE

Introduction. This case arises out of earlier proceed-
ings between the petitioners and Kochcapital, Inc., a
former securities broker-dealer, other parties, and Melvin

2

Leiner, James Caprio, and Darren Marks. In September
1995, the latter parties settled with the plaintiffs in a
settlement agreement for cash and stock in SIMS Com-
munications, Inc. On October 26, 1995, SIMS issued
55,554 shares of stock to Thomas Cacciola and Peter
Vetrano under the agreement.’ The certificates are signed
by Mel Leiner as President and by James Caprio as
Secretary of the corporation. The certificates have a
restrictive legend as defined in Rule 144 and may not be
sold prior to February 10, 1997. (R. 532, 295, 300, 308).

At the time of the agreement, SIMS was selling its
securities on the NASDAQ National Market System, and
its stock was published in the Wall Street Journal. (R.
321). Approximately six months later (March 1996), SIMS
effected a 10 for 1 reverse split of its common stock. (R.
495, 507, 512). In May 1997, petitioners discovered that
their shares had been reduced to 2,777 shares each
through the reverse split in March 1996. (R. 298, 306). In
February 1998, SIMS again split its stock in a 4 for 1
reverse split of the company’s stock. (R. 527). They discov-
ered the second reverse split of their stock eight or nine
months later. (R. 299, 306-07).

Current Action. This case was filed in September
1997. A few months later, SIMS filed motions to dismiss
the complaint, primarily arguing that it is not subject to
jurisdiction in Washington, has never transacted business

* The agreement defines corporation to mean SIMS Communica-
tions in which the defendants are “employees, officers and/or directors,”
and a default thereunder occurs by any failure of SIMS to pay the fair
market value of the securities subject to the holding period under Rule
144. The agreement also provides, “The parties each represent and
warrant that they have legal capacity and actual authority to enter into
this [a]greement and to carry out all actions required of them by this
[a]jgreement.” In addition, Washington law and jurisdiction in King
County, Washington govern the agreement, and there is a provision for
attorney fees and costs to the party(ies) who substantially prevail in
proceedings arising out of the agreement. (R. 310-13). _

3

in the state, and does not have minimum contacts with
Washington state. (R. 31 & 33-34). In January 1998, a
motion continuing the motion to dismiss, based on pending
discovery, was granted. (R. 51-52). A briefing of the issues
demonstrated that jurisdiction over SIMS existed in this
case.’ (R. 62-66).

Discovery established that SIMS was doing business
in Washington between January 1995 and May 1996
under a Certificate of Authority, and was conducting
business and rental cellular telephone operations by
automated dispensing machines at Alamo Rent-A-Car
locations in this 17-month period. (R. 425, 483). Docu-
ments produced included a SIMS prospectus showing that
it was doing business nationally (R._ 386), and financial
statements relating that its operations were generating
seven figure revenues across the country. (R. 357).

In October 1998, the depositions of SIMS CR 30(b)(6)
designate, James Caprio, Mel Leiner and Darren Marks
were taken in Florida. From the depositions, it became
clear that the stock issued under the agreement could not
be traced to a prior owner (R. 942-958, 960-978, 990-1001),
and that the shares originated from SIMS, as opposed to
shares owned or controlled by them. (R. 1027-28).

* See, e.g., Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585
(1991); Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985); and The
Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972). The briefings in
essence argued that the forum clause in the agreement establishes
consent to jurisdiction in Washington, and is prima facie valid and
enforceable. The same result is reached under state law. The stock
certificates that were signed by the President and Secretary of SIMS,
on behalf of SIMS, and the issuance of stock as required by the agree-
ment collectively constitute an agreement or contract between SIMS,
the defendants and the plaintiffs. See Parker v. BankAmerica Corp., 50
F.3d 757, 763 (9th Cir. 1995). Additionally, an agency relationship is
material to the jurisdictional issue, and will subject a non-resident
entity like SIMS to in personam jurisdiction in Washington state. See
Chan v. Society Expeditions, Inc., 39 F.3d 1398, 1405-07 (9th Cir. 1994).

3

In November 1998, a second amended complaint was
filed in essence alleging that as of September 1995, SIMS
was incurring substantial losses, and had losses from its
formation in 1991 (as of 9/94, losses of $4,867,000, and as
of 9/95, $2 million in additional losses). It is alleged that
these facts were not disclosed at the time of the agree-
ment, and violate the Washington Securities Act. The com-
plaint also alleges that their shares were issued in viola-
tion of Rule 144, 17 C.F.R. § 230.144, and that they were
not given notice of the reverse splits of their stock. (R. 344,
373, 284-85, 297).

In December 1998, a second ‘motion for summary
judgment was denied. (R. 560-61). In June 1999, a third
motion for summary judgment was filed, and in this time
frame, plaintiffs filed a motion for partial summary
judgment under Rule 144. (R. 1255, 830). On a hotly
disputed record, the former motion was granted in August
1999. The order dismissed the complaint for failure to
raise an issue of fact in support of the claims, and dis-
missed the complaint against SIMS for lack of. personal
jurisdiction. (R. 1124). Re-notes of the motion for partial
summary judgment were filed in September. (R. 1127,
1179). In October 1999, a motion for attorney fees and
costs was granted in the defendants’ favor for $47,865.90.
(R. 1183). A motion for reconsideration was denied. The
order states that the partial summary judgment motion
was mooted by the grant of summary judgment. (R. 1597).

Decisions on Appeal. In November 1999, an appeal
was timely filed from these orders. During the appeal, a
supersedeas bond was set for $75,000 staying enforcement
of the judgment and covering the respondents’ attorney
fees in the appeal. In November 2001, oral argument was
presented, and on December 17, 2001, the Court of Ap-
peals issued a decision affirming the dismissal of SIMS for
lack of jurisdiction, reversing the dismissal of the claims
under the Washington Securities Act, and dismissing the
claims under the Securities Act of 1933, and associated,
but separate, claims under state law.

5

The affirmance for lack of personal jurisdiction deli-
cately speaks to the activities of SIMS Communications in
Washington for 17 months through its business and rental
cellular telephone operations at Alamo Rent-A-Car outlets
from January 1995 to May 1996, and its revenues in this
period ($12,000), but planing from its decision Helicopteros
Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984),
states that these contacts are insufficient to support
general jurisdiction in this case. The decision discerns that
specific jurisdiction is also lacking because SIMS was not a
party to the agreement and, making no mention of the
Burger King, Bremen, Carnival Cruise Lines or of the
Parker and Chan cases, states that it is not subject to the
agreement's forum clause. (App., pp. 3a-6a).

The decision affirming the dismissal of petitioners’
claims under the 1933 Act is based on Litho Color, Inc. v.
Pac. Employers Ins. Co., 98 Wn. App. 286, 991 P.2d 638
(1999), and the absence of argument on the claims. (App.,
pp. 8a-9a, 14a). These claims are based on Rule 144, and
were extensively briefed in the appeal. (9/20/02 Motion for
Reconsideration, pg. 9, and Appendix C to Motion).

The constitutional arguments before the Washington
Supreme Court for the assertion of in personam jurisdic-
tion are in essence that SIMS contacts with Washington
state are inarguably sufficient to satisfy the requirements
of the Due Process Clause of the Fourteenth Amendment
under principles of general jurisdiction, Helicopteros, 466
U.S., at 414-18, and specific jurisdiction. Burger King, 471
U.S., at 472-82; The Bremen, 407 U.S. at 10-15. (Petition
for Review, pgs. 13-19).

The constitutional arguments as they concern the
Securities Act of 1933 are intrinsically based on the
dismissal of these claims contrary to due process consid-
erations and the holdings in Bell v. Burson, 402 U.S. 535
(1971), Richards v. Jefferson County, 517 U.S. 793 (1996),
Logan v. Zimmerman Brush Co., 455 U.S. 422 (1982), and
Boddie v. Connecticut, 401 U.S. 371 (1971). (9/20/02
Motion for Reconsideration, pgs. 9-10; Petition for Review,

6

pg. 20). It was in essence argued that thie important claim
had been dismissed, when argument was presented on
these issues, and that the claims under Rule 144 could not
be asserted as they stood in the appeal because of the
dismissal of the 1933 Act by the state courts.

On September 4, 2002, the Washington Supreme
Court, comprising a majority of five of the nine Justices of
the Court, dismissed the appeal. (App., 17a).

REASONS FOR GRANTING THE PETITION

Section I of this petition for certiorari explains that
this Court has jurisdiction to review the judgment of the
Washington Court of Appeals under 28 U.S.C. § 1257(a),
consistent with the standards in Cox Broadcasting Corp. v.
Cohn, 420 U.S. 469 (1975). Section II of this petition
explains that general jurisdiction in this case is present
under the principles of this Court’s decision in Helicop-
teros, and may more firmly be based on consent under the
holdings in Perkins v. Benguet Consolidated Mining Co.,
342 U.S. 437 (1952), and Neirbo v. Bethlehem Corp., 308
U.S. 165 (1939). This section discusses the importance of
the due process issues in these settings, and the conflict
between the decisions of the state courts that in personam
jurisdiction may not be exercised over a foreign corpora-
tion with rich connections with the forum state, and the
reasoning of this Court’s decisions and the decisions of
other federal and state courts. Section II also discusses the
importance of the due process issues in a specific jurisdic-
tional setting, and the conflict between the decisions below
and the rationale of the Court’s decisions in the Carnival
Cruise Lines, Burger King, and The Bremen cases.

Section III discusses the conflict between the decisions
of the state courts dismissing petitioners’ claims under the
Securities Act of 1933 and the due process decisions of this
Court in Bell v. Burson, Richards v. Jefferson County,
Logan v. Zimmerman Brush Co., and Boddie v. Connecti-
cut. :

7

I.

THE DECISION OF THE WASHINGTON COURT
OF APPEALS IS REVIEWABLE BY THIS COURT
PURSUANT TO 28 U.S.C. § 1257(a), UNDER THIS
COURT’S DECISION IN COX BROADCASTING
CORP. v. COHN, 420 U.S. 469 (1975)

The appellate jurisdiction of this Court has been
invoked by the petitioners pursuant to 28 U.S.C. § 1257(a).
The statute requires that the judgment for which review is
sought be final. American Motorists Ins. Co. v. Starnes,
425 U.S. 637, 642 n.3 (1976). This has historically been
expressed by the Court to mean that finality is not nor-
mally satisfied if the state courts must conduct further
substantive proceedings before the federal issues are
resolved. Pennsylvania v. Ritchie, 480 U.S. 39, 47 (1987);
Market Street R. Co. v. Railroad Comm’n of Cal., 324 U.S.
548, 551 (1945).

In a classically older case with roots in a number of
recent cases, the Court observed that the finality doctrine
“as a legal concept ... has a penumbral area.” Radio
Station WOW, Inc. v. Johnson, 326 U.S. 120, 124 (1945).
The Court also recognized that the rule has not been
applied mechanically and that there are circumstances in
which there has been “a departure from [the] requirement of
finality for federal appellate jurisdiction.” Cox Broadcasting
Corp. v. Cohn, 420 U.S. 469, 477 (1975). In Cox, the Court
stated that there are at least four categories of cases
where it has found jurisdiction to be appropriate in the
presence of further proceedings in the state courts. In the
first category are cases where “the federal issue is conclu-
sive or the outcome of further proceedings preordained. In
these circumstances, because the case is for all practical
purposes concluded, the judgment of the state court on the
federal issue is deemed final.” In the third category, are
cases “where the federal claim has been finally decided,

with further proceedings ... in the state courts to come,
but in which later review of the federal issue cannot be
had, whatever the ultimate outcome of the case.” 420 U.S.,
at 479-81.

Mills v. Alabama, 384 U.S. 214 (1966), and Organiza-
tion for a Better Austin v. Keefe, 402 U.S. 415 (1971) are
examples of cases in the first category. In Mills, a claim
under the First Amendment to a statute proscribing the
publication of editorial promotion on an election day was
frustrated by the Alabama courts, thus nullifying the
defense in a trial that “would be no more than a few
formal gestures leading inexorably towards a conviction,”
384 U.S., at 217. In Austin, the Illinois Courts had af-
firmed a temporary injunction for distributing literature
on respondent’s real estate practices, and this Court found
that a permanent injunction on termination of the pro-
ceedings would “be little more than a formality.” 402 U.S.,
at 418. This case is practically no different. As in Mills and
Austin, the petitioners have no defenses to entry of an
order like the judgment entered in October 1999, which is
a formality in the absence of their federal claims that
personal jurisdiction over SIMS is constitutionally present
under the Fourteenth Amendment.’

* The Court of Appeals held that SIMS was not a party to the
agreement and therefore not subject to the forum clause (App. 6a), but
it clearly is a party to the agreement under its express provisions. See
infra, pp. 22-23. The basis of the liability is RCW 4.28.185(5), which
authorizes an award of attorneys’ fees to a non-resident defendant who
prevails in the action. Voicelink Data v. Datapulse, 86 Wn. App. 613,
627, 937 P.2d 1158 (1997); Hewitt v. Hewitt, 78 Wn. App. 447, 456-57,
896 P.2d 1312 (1995). This is the statutory basis for including SIMS in
the underlying judgment. Because the federal issue as it concerns
jurisdiction is conclusive, the outcome of the liability is predetermined.

9

Moreover, as more recently explained in Duquesne
Light Co. v. Barasch, 488 U.S. 299 (1989), the state courts
have finally adjudicated the issues of jurisdiction and
under the 1933 Act, “and so has left ‘the outcome of further
proceedings preordained.’” Jd., at 306. These issues were
decided on the merits by the state courts, review was
denied by the highest state court, and motions for recon-
sideration were filed in both courts, such that there can be
no trial with SIMS or on these issues, but rather, the
dormant possibility of another appeal in the state courts
for them to formally repeat the last word on what has
already been stated. The Court has treated state-court
judgments as final in these cases because the results of
this refracted process are inexcusable delay and “a com-
pletely unnecessary waste of time and energy in judicial
systems. ...” Mills, 384 U.S., at 217-18.

Also, of related importance, as in Austin, but unlike
Florida v. Thomas, 532 U.S. 774 (2001), there is no evi-
dence that the dismissals for lack of personal jurisdiction
and of the 1933 Act claims rest on a disputed question of
fact, Austin, 404 U.S., at 418, or that further fact-finding
is necessary in the remand. Thomas, 532 U.S., at 778. The
state-court judgment is final on the federal issues, and
quite analogously to Cox, if the final decision on the
federal issues is incorrect, federal law forecloses further
proceedings on a congruous judgment in the state courts,
but if the decision is correct, the litigation will terminate
in a decision by this Court on the merits.

This case also satisfies Cox’s third exception for cases
“where the federal claim has been finally decided, with
further proceedings on the merits in the state courts to
. come, but in which later review of the federal issue cannot
be had, whatever the ultimate outcome of the case.” 420
U.S., at 481. Resolution of the state-law claims in the
remand would effectively moot the federal issues raised
here. Significantly, as with the dismissed claims under the

10

1933 Act and Rule 144, the claims that have survived the
remand under the Washington Securities Act have been
similarly asserted in the same action with SIMS. In the
state-court proceedings, the respondents maintain that
they did not withhold material information from petition-
ers on the financial status of SIMS at the time of the
settlement agreement, and if they prevail on this narra-
tive of the facts, then the same claims involving SIMS will
also fail because they will have established that they are
not liable for petitioners’ losses under state law. In this
situe+ion, the petitioners’ claims will have been denied “on
state law grounds, thus foreclosing the federal issue.” See
420 U.S., at 482.

Alternatively, if petitioners prevail on the merits, they
will have no basis to seek review and the federal issues
will be mooted. See Ritchie, 480 U.S., at 48; Cox Broad-
casting Corp., 420 U.S., at 481. In this event, the ability of
petitioners to obtain review of the federal issues (which
have already been decided by the state courts) will depend
on respondents’ willingness to appeal. Should they appeal
a jury’ decision, the only method for preserving the
federal issues is by cross-appeal, and the only way this
Court will be able to reach the issues is if the respondents
file a petition for certiorari (assuming a verdict is not
reversed) and petitioners file a cross-petition. When a case
18 in this posture, the Court has considered it sufficiently
final to justify review. See Ritchie, 480 U.S., at 48.

_ The decisions of the state courts on the issues of in
personam jurisdiction and under the Securities Act of 1933
are unambiguously final under 28 U.S.C. § 1257(a). Also,
considering that the litigation could be terminated by a
decision on the federal issues, reaching the merits is
consistent with the pragmatic approach the Court has
followed in the past in determining finality.

11

Il.

THE DECISION RAISES IMPORTANT
QUESTIONS OF FEDERAL CONSTITUTIONAL
LAW, AND CONFLICTS WITH THE REASONING
OF THIS COURT’S DECISIONS IN THE
HELICOPTEROS, PERKINS, NEIRBO,
BURGER KING, AND BREMEN CASES
A. .

The exercise of personal jurisdiction by a state over a
non-resident entity is constitutionally determined by the
Due Process Clause of the Fourteenth Amendment. Heli-
copteros, 466 U.S., at 413-14. Due process requirements
are satisfied when in personam jurisdiction is asserted
over a nonresident entity that has “certain minimum
contacts with [the forum] such that the maintenance of the
suit does not offend ‘traditional notions of fair play and
substantial justice.” Id., at 414, quoting International
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Histori-
cally and in recent cases, the Court has melded its holding
in International Shoe in specific and general jurisdictional
settings. Asahi Metal Industry Co. v. Superior Court, 480
U.S. 102, 113 (1987); Helicopteros, 466 U.S., at 414-18.

In this time-resistant framework, the Court has held
that general jurisdiction is determined by exploring
whether the nature of the contacts with the forum state
“constitute the kind of continuous and systematic general
business contacts” the Court has found present where the
activities in the forum are sufficient to support jurisdiction
over cases unrelated to those activities. Jd., at 414-16.

Applying these principles to the contacts that SIMS
Communications established in Washington, there is
engulfing record evidence that the due process require-
ments of general jurisdiction were satisfied in this case.
Summarizing the evidence below, SIMS was doing busi-
ness in Washington between January 1995 and May 1996
with state approval, and was conducting its business and

12

rental cellular telephone operations by automated dispens-
ing machines at Alamo Rent-A-Car locations in this year-
and-a-half period.

It is undisputed that SIMS was transacting business
in Washington pursuant to RCW 23B.15.030 of the Washing-
ton Business Corporations Act under a Certificate of Author-
ity filed in December 1995. As a Delaware corporation, SIMS
was authorized under state law, as a domestic corporation is
authorized, to transact business in Washington, and by
statute, had the same rights and privileges, and was
subject to the same duties, restrictions, and liabilities as
are imposed on a domestic corporation. RCW 23B.15.050(2).

Under its Certificate of Authority, SIMS consented to
the appointment of a registered agent in Washington for
service of process, and maintained a local address for mail
and corporate license materials. (R. 485-86). SIMS also
maintained a corporate account with the state (R. 489). As
a registered corporation, SIMS was subject to state taxa-
tion and reporting requirements (R. 489), and was subject
to state administrative actions for non-compliance with
state law. The existence of legal obligations in the forum is
a decisive factor under RCW 4.28.010(10) in determining
whether general jurisdiction exists. Crose v. Volkswagen-
werk Aktiengesellschaft, 88 Wn.2d 50, 54, 558 P.2d 764
(1977); Raymond v. Robinson, 104 Wn. App. 627, 633, 15
P.3d 697 (2001).

_ The physical presence maintained by SIMS in Wash-
ington is manifested by its business operations and dis-
pensing machines which occupied part of the premises at
Alamo rental car outlets in the state. It is clear. that
consideration passed by rental, lease or otherwise between
SIMS and Alamo Rent-A-Car to conduct its business
operations at Washington Alamo outlets. Their agree-
ments, written or otherwise, gave rise to legal obligations
between them and there is no doubt that a breach or a
default by the parties in their agreements would have
subjected them to legal obligations in Washington.

13

It is undisputed that SIMS conducted its business
operations in Washington by credit card (R. 376), and that |
every resident credit card it charged between January
1995 and May 1996 (and it may be surmised that there
were hundreds) gave rise to legal obligations in contract
(and potentially tort) with Washington residents.

Despite the prolific nature of these substantial juris-
dictional contacts, the decision nonetheless highlighted the
activities of SIMS in Washington for 17 months through
its business and rental cellular telephone operations at
Alamo rental car outlets from January 1995 to May 1996,
and its revenues in this period ($12,000), and held that
although these facts place this case somewhere between
the factual scenarios in Raymond v. Robinson, 104 Wn.
App. 627, 15 P.3d 697 (2001), Hartley v. American Bridge
League, 61 Wn. App. 600, 812 P.2d 109 (1991), and Banton
v. Opryland, U.S.A, Inc., 53 Wn. App. 409, 767 P.2d 584
(1989), these contacts are insufficient to support general
jurisdiction in this case. (App., 6a). Significantly, these
facts were decisively sufficient to withstand two motions
for summary judgment, and no new facts were presented
in the final summary judgment motion. Also, although
these cases appear to establish the basis of the jurisdic-
tional inquiry, the present case is more of a prismed applica-
tion of Perkins, though in a different context, than it is of
the cases on which the decision is based.

This case is like Perkins because there, as here, a
foreign corporation carried on in the forum state “a con-
tinuous and systematic, but limited part, of its general
business.” 342 U.S., at 438. In Perkins, petitioner filed
~ actions in Ohio against a mining company seeking divi-
dends due as a stockholder, and damages because of the
companys failure to issue her stock certificates. The
company’s mining properties were in the Philippines, but
its operations were halted during the Japanese occupation.
During that interim, the president maintained an office in
Ohio from which he conducted company activities, kept
company files and held directors meetings, distributed

14

salary checks to himself and to two secretaries drawn on
Ohio bank accounts, used an Ohio bank as a transfer
agent, and supervised policies dealing with its Philippine
properties. Id., at 447-48. This Court held that these
activities in the forum in this interim period were continu-
ous and systematic. Id., at 448.

The contacts established by SIMS Communications in
Washington are, on the one hind, comparably continuous
to the business activities in Perkins, and on the other, may
be more systematic than these activities. It is clear that
SIMS was conducting business nationally in car rental
agencies, airports, and hotels from Massachusetts and
New Jersey, through the Midwest and the South, to Puerto
Rico and Hawaii, to California at the time of the agree-
ment, and was also conducting business operations in
Washington in this period. As in Perkins, SIMS carried on
a limited part of its general business in the forum state. It
is unknown in Perkins the extent to which the activities in
the forum were carried on in an everyday and uninter-
rupted or continuous manner, but it is quantitatively
known in this case that these activities were being con-
ducted in Washington on a consistent, uninterrupted and
round-the-clock basis for a year-and-a-half. The “AC/DC”
units employed by SIMS were operated as automated
dispensing stations, and accepted funds through credit
cards or electronic funds transfer. (R. 385-86).

The systematic nature of the contacts in Perkins, two
state bank accounts and engaging a state bank to act as
transfer agent, are comparably demonstrated by the credit
card transactions and funds transfers from Washington
Alamo rental car locations, the corporate accounts it
maintained with the state, and by the state taxation and
reporting requirements that SIMS was subject to in
Washington. The qualitative character of affiliate contacts
in Perkins, the directors meetings, correspondence relating
to company business, and supervision of foreign properties
in the forum, are important in the minimum contacts
analysis, but may not be as substantial as the statutory

ay

15

consent obtained by SIMS from Washington under its
Certificate of Authority to transact business in the state,
the registered agent it maintained in Washington for
service of process, the address it maintained for mail and
corporate license materials, the commercial agreements it
had with Alamo Rent-A-Car to conduct its business opera-
tions at its Washington outlets, and the legal obligations it
was subject to with state residents. As in Perkins, these
activities have a character cf continuity in them, but they
are innately systematic because they define the continuity
of the contacts in the forum.

Also, like Perkins, the contacts established by SIMS in
Washington are more substantial than the activities in
Helicopteros, where the contacts of Helicol, a Columbian
corporation, were held to be insufficient to satisfy the
requirements of due process. The Court based its holding
on the grounds that a trip to Texas by its CEO to negotiate
a contract was not a contact of a continuous or systematic
nature, as Perkins and International Shoe described it;
accepting checks into its New York bank drawn on a Texas
bank were of negligible significance because “such unilat-
eral activity ... is not an appropriate consideration when
determining whether a defendant has sufficient contacts
... to justify the assertion of jurisdiction,” citing Kulko v.
Superior Court, 436 U.S. 84, 93 (1978); and under
Rosenberg Bros. & Co. v.. Curtis Brown Co., 260 U.S. 516
(1923), the purchases of equipment from Texas and sending
personnel to Texas for training, standirg alone, was not a
sufficient basis for a State’s assertion of jurisdiction.
Helicopteros, 466 U.S., at 416-19. None of the activities in -
Helicopteros that were found to be unilateral or negligible
are present in this case.

The decision appears to have arched the balance
against the exercise of jurisdiction on the basis of the
Raymond, Hartley and Banton cases, and because the
appellants presented no evidence “that SIMS had offices,
employees or agents in this state,” but to the contrary, as
this case bears out, the polar opposite is true on the latter

16

point. Moreover, except for Hartley, these cases are en-
tirely inapposite.‘ In Hartley, the Court held that a bridge
league was subject to general jurisdiction because it:
organized bridge tournaments and sold and transported
bridge supplies in the state, charged and collected fees
from state residents, and determined which residents
could participate in tournaments. 61 Wn. App., at 606.

The differences between these cases and this case are
markedly clear. There is no mention in Raymond or
Banton (as is the case here) that the parties had offices,
maintained a physical business presence, a registered
agent, or had statutory consent to do business in the state.
These latter facts, a registered agent and statutory con-
sent, are as well lacking in Hartley. It also cannot be said
in these cases, as it can in the present case, and as it can
in Perkins and International Shoe, that the parties over
whom jurisdiction was sought maintained a continuous
business presence in the forum, or that they conducted
these activities on a regular basis in the state.

The federal questions on the seemingly clear presence
of general jurisdiction in this case are substantial because

* In Raymond, an Arizona company that installed RV accessories
with no offices or agents in Washington advertised its products to
Washington consumers through magazines and mailings, negotiated
sales with state consumers over the phone and through the mail,
authorized warranty repairs in Washington, and sent a technician to
Washington to service the unit at issue. The court held that these
contacts were not sufficient for the exercise of general jurisdiction. 104
Wn. App., at 633-36. In Banton, a Washington resident was injured
while visiting the Grand Ole Opry in Tennessee, and had visited
Opryland after going to a promotional presentation in Washington. The
Court held that presentations to solicit persons to visit Opryland,
occasional payment of commissions to travel agents, occasional
broadcasts of music, and reservations affecting a few state residents did
not suggest continuous involvement in Washington, and that these
activities wére insufficient to confer general jurisdiction. 53 Wn. App.,
at 417-18.

am ia ——————

17

they involve applications and permutations of Helicop-
teros, Perkins and International Shoe in difficult and
principally grey areas on which this Court has not defini-
tively or recently spoken. On related grounds, the jurisdic-
tional facts in this case go beyond the concise holdings in
these cases because SIMS was registered in Washington
under its Certificate of Authority to transact business in
the state, and maintained a registered agent in Washing-
ton for service of process.

This Court has held in a number of cases that a
foreign corporation which authorizes an agent for service
of p1.cess in compliance with a state registration statute
conse ats to the exercise of general personal jurisdiction in
that state. Neirbo Co. v. Bethlehem Corp., 308 U.S. 165,
166, 174-75 (1939); Pennsylvania Fire Ins. Co. v. Gold
Issue Mining Co., 243 U.S. 93, 95 (1917). In the latter case,
the Court held that Missouri could constitutionally exer-
cise general jurisdiction over a foreign corporation, and
“not deprive the defendant of due process,” even though its
only apparent contact with Missouri was its designation of
the Superintendent of Insurance as its registered agent in
compliance with state law. Ibid.

The Court has not directly examined its holdings in
the Neirbo and Pennsylvania Fire Ins. Co. cases since its
decision in International Shoe Co. v. Washington; however,
historical and more recent support for the recognition of
consent through statutory registration as a basis for
general jurisdiction is notably present in important cases
that have been decided after International Shoe. In Per-
kins, for example, the Court reaffirmed the principle that
there would have been no need to consider minimum
contacts if consent had been given: “Today if an authorized
representative of a foreign corporation be physically

| present in the state ... and be there engaged in activities
appropriate to accepting service ... there is no unfairness
in subjecting that corporation to the jurisdiction of the
courts of that state. ...” Perkins, 342 U.S., at 444.

18

Federal and state cases that have considered the due
process basis for the holdings in Neirbe and Pennsylvania
Fire Ins. Co. in light of International Shoe are divided
on this issue.’ Thus, a decision on this question goes
significantly beyond a single Washington statute. It
impacts the transacting business statutes of almost every
state, and does so on a subject about which this Court has
not recently spoken. Because the inquiry is far-reaching, a
significant federal question is presented.

* A number of federal and state courts have approved the rationale
of these cases. See, e.g., Holloway v. Wright & Morrissey, Inc., 739 F.2d
695, 697 (1st Cir. 1984) (Stewart, J., sitting by designation); Bane v.
Netlink, Inc., 925 F.2d 637, 640-41 (3d Cir. 1991); Cowan v. Ford Motor
Co., 694 F.2d 104, 105-06 (5th Cir. 1982), question certified on reh’g, 713
F.2d 100 (5th Cir.), rev’d & action remanded, 719 F.2d 785 (5th Cir.
1983); Sondergard v. Miles, Inc., 985 F.2d 1389, 1395-96 (8th Cir. 1993);
Schreiber v. Allis-Chalmers Corp., 611 F.2d 790, 793 (10th Cir. 1979);
Crosfield Hastech, Inc. v. Harris Corp., 672 F.Supp. 580, 585 (D.N.H.
1987); LaCorte Elec. Const. v. Centron Sec. Systems, Inc., 894 F. Supp.
80, 83 (N.D.N.Y. 1995); Amalgamet, Inc. v. Ledoux & Co., 645 F.Supp.
248, 249 (S.D.N.Y. 1986); Vogel v. Tenneco Oil Co., 276 F.Supp. 1008,
1012 (D..D.C. 1967); Kyle v. Days Inn of America, Inc., 550 F.Supp. 368,
369 (M.D. Pa. 1982); Fischman v. Fischman, 470 F.Supp. 980, 982 (E.D.
Pa. 1979); Sternberg v. O’Neal, 550 A:2d 1105, 1111 (Del. 1988);
Mittelstadt v. Rouzer, 213 Neb. 178, 328 N.W.2d 467, 469 (1982); White
v. Pepsico, Inc., 568 So.2d 886, 889-90 (Fla. 1990); Washington v.
Superior Court, 169 Wash. 688, 692-96, 15 P.2d 660 (1932). Other
courts have rejected the rationale of these cases. See, e.g., Sandstrom v.
Chemlawn Corp., 904 F.2d 83, 89 (ist Cir. 1990); Metropolitan Life Ins.
Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566, 575 (2nd Cir.), cert.
denied, 519 U.S. 1006 (1996); Ratliff v. Cooper Laboratories, Inc., 444
F.2d 745, 748 (4th Cir. 1971); Wenche Siemer v. Learjet Acquisition
Corp., 966 F.2d 179, 182-83 (5th Cir. 1992), cert. denied, 506 U.S. 1080
(1993); Western Helicopters v. Bell Helicopter Co., 929 F.Supp. 59, 63 (D.
Puerto Rico 1996); Goodyear Tire v. Ruby, 312 Md. 413, 540 A.2d 482,
487 (Md. 1988); Freeman v. Dist. Ct., 1 P.3d 963, 968 (Nev. 2000); Speck
v. Mutual Serv. Life Ins. Co., 65 Ohio App.3d 812, 585 N.E.2d 509, 512
(1990); Conner v. Conticarriers and Terminals, 944 S.W.2d 405, 416
(Tex.Civ.App. 1997); Washington Equip. v. Concrete Placing, 85 Wn.
App. 240, 246, 931 P.2d 170 (1997).

19

Considering, however, the lucent reasoning of the
more recent decisions in Holloway v. Wright & Morrissey,
Inc., 739 F.2d 695 (1st Cir. 1984), Sondergard v. Miles,
Inc., 985 F.2d 1389 (8th Cir. 1993), and Sternberg v.
O’Neal, 550 A.2d 1105 (Del. 1988), and also considering
this Court’s incisive statement in Perkins, subsequent to
International Shoe, reaffirming the principle that there is
no unfairness in subjecting a corporation to the jurisdic-
tion of the courts of a state in this consensual setting,
there can be little doubt that SIMS has assented to the
jurisdiction of Washington courts in this case.

B.

As explained in the previous section, personal juris-
diction is unequivocally measured by due process under
the Fourteenth Amendment. This is also true in a specific
jurisdictional setting, but the focus is measurably differ-
ent. The cornerstones of specific jurisdiction under this
Court’s cases encompass three indispensable inquiries:
whether an out-of-state corporation or non-resident
individual “purposefully established ‘minimum contacts’ in
the forum State,” whether the cause of action “arises out of
or relate[s] to” the activities with the forum, and whether
“the assertion of personal jurisdiction would comport with
‘fair play and substantial justice.’” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472-76 (1985). This is also true
under state law. Deutsch v. West Coast Mach. Co., 80

Wn.2d 707, 711, 497 P.2d 1311 (1972).

Minimum contacts must have a basis in “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 laws.”
Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102,
109 (1987) (citing Hanson v. Denckla, 357 U.S. 235, 253
(1958)). “Jurisdiction is proper ... where the contacts
proximately result from actions by the defendant himself
that create a ‘substantial connection’ with the forum.... ”
Burger King, 471 U.S., at 475.

20

The substantial connection between an out-of-state
corporation and the forum necessary for a finding of
minimum contacts comes about by an action of the entity
purposefully directed toward the forum State. Asahi Metal
Industry, 480 U.S., at 112. Even a single act can support
jurisdiction if it creates a substantial connection with the
forum. Burger King, 471 U.S., at 475 n.18. Jurisdiction
“may not be avoided merely because the defendant did not
physically enter the forum.... So long as a commercial
actor’s efforts are ‘purposefully directed’ toward ... an-
other State,” this Court has “consistently rejected the
notion that an absence of physical contacts can defeat
personal jurisdiction there.” Id., at 476.

In Burger King, the Court held that the assertion of
personal jurisdiction in Florida over a Michigan resident,
for the alleged breach of an agreement with Burger King,
a Florida corporation, did not offend due process. In
considering whether and to what extent a contract can
constitute a contact for purposes of due process analysis,
the Court observed, “The Court long ago rejected the
notion that personal jurisdiction might turn on ‘mechani-
cal’ tests, International Shoe Co. v. Washington.... In-
stead, we have emphasized the need for a ‘highly realistic’
approach that recognizes that a ‘contract’ is ‘ordinarily but
an intermediate step serving to tie up prior business
negotiations with future consequences which themselves
are the real object of the business transaction.’” 471 U.S.,
at 478-79.

The present case in a number of relevant aspects, as
explained in more depth below, is like Burger King be-
cause here, as there, the parties entered a structured
_ agreement with future consequences in the forum, and
like Burger King, the agreement here has a choice-of-law
provision providing that it is to be interpreted and en-
forced under the laws of Washington. Unlike Burger King,
and more like The Bremen and Carnival Cruise Lines
cases, the agreement has a forum clause providing for

lla errr eear errr sea era

21

jurisdiction in Washington, which solidifies the presence of
specific jurisdiction in this case.

There can be little doubt that SIMS Dommvententions
purposefully availed itself of the Washington market. The
record shows that it purposely delivered its products into
the stream of Washington commerce with the result that
its products were purchased by Washington consumers for
a year-and-a-half, and that it benefited from the Washing-
ton market. These facts are more than sufficient to sup-
port the exercise of general jurisdiction, but they are
immaterial as a basis for satisfying this requirement
because the causes of action in this case do not arise from
these facts. The more powerful ground that satisfies this
element is the parties’ agreement, and the execution by
SIMS of the stock certificates transferred under the
agreement.

The requirement of personal jurisdiction is based on due
process and is a right that can be waived. Insurance Corp. v.
Compagnie des Bauxites, 456 U.S. 694, 702-03 (1982). A
negotiated agreement with a forum clause that shows
consent to jurisdiction is enforceable unless it can be shown
that enforcement would be unreasonable and unjust, or that
it is invalid for fraud or overreaching. The Bremen v. Zapata
Off-Shore Co., 407 U.S. 1, 10-15 (1972); Kysar v. Lambert, 76
Wn. App. 470, 484-85, 887 P.2d 431 (Div. II), rev. denied, 126
Wn.2d 1019 (1995). As previously noted, the agreement has a
choice-of-forum provision in which jurisdiction is in the
courts of Washington. The respondents did not show in the
state court proceedings that the provision was invalid or
unreasonable, that there is serious inconvenience of the
contractual forum or that Washington is a “remote alien
forum.” The forum clause confirms consent by the individual
respondents to jurisdiction in Washington, and is prima
facie valid and enforceable. See Carnival Cruise Lines, Inc.
v. Shute, 499 U.S. 585, 591-95 (1991); Burger King, 471
U.S., at 472 n.14; The Bremen, 407 U.S., at 10, 15; Kysar,
76 Wn. App., at 484-85.

| apg

22

SIMS did, however, argue that Washington does not
have jurisdiction over it because it was not a party to the
agreement and cannot be bound by its terms, nothing
indicates that anyone signed anything on its behalf, and
that it does not have sufficient minimum contacts for the
exercise of jurisdiction in this case. (R. 31, 33-34). The
record discredits these assertions, and to the contrary as
argued by SIMS, its contentions overlook substantial
record evidence that it clearly knew it was affiliating itself
with an agreement having long-term consequences in
Washington. Burger King admonishes courts to carefully
consider prior negotiations and contemplated future
consequences, along with the terms of the contract and the
parties’ course of dealing, in evaluating whether a party
purposefully established minimum contacts with the
forum. 471 U.S., at 479.

The contract documents required the issuance of
50,000 shares of SIMS Communications stock, and explic-
itly state that a default under the agreement occurs by
any failure of SIMS to pay the fair market value of the
securities subject to the holding period of Rule 144. Also,
the agreement defines corporation to mean “SIMS Com-
munications ... in which Defendants are employees,
officers and/or directors,” and the stock certificates issued
under the agreement-were signed by the President and
Secretary of SIMS.°

© Whether the stock transferred under the agreement was issued
by SIMS Communications or, as the respondents contended below, was
owned and/or controlled by the individual respondents is immaterial
because SIMS is liable for the obligation under the terms of the
certificates. The certificates provide in pertinent part, “SIMS COM-
MUNICATIONS, INC., INCORPORATED UNDER THE LAWS OF ...
DELAWARE, AUTHORIZED: 20,000,000 COMMON SHARES. .. . This
Certifies that ... is the owner of ... Fully Paid and NonAssessable
Common Stock ... of SIMS COMMUNICATIONS, INC. transferable
only on the books of the Corporation by the holder hereof in person or
by Attorney upon surrender of this Certificate properly endorsed. This

(Continued on following page)

iii aD

23

The terms of the agreement confirm that SIMS
became party to an agreement with future consequences
and legal obligations in Washington. The parties’ actual
course of dealing substantiates that the execution of
material documents required under the agreement by its
President and Secretary were preceded by negotiations
with their Florida counsel conducted by telephone and fax,
(R. 1027-28), that the stock certificates delivered under the
agreement were subject to a two-year holding period (Rule
144) pursuant to an agreement governed by Washington
law, and that the agreement and the certificates were
subject to three-year and six-year limitations periods of
state law under RCW 4.16.080 (tort actions) and RCW
4.16.040 (contract actions). The sum of these actions and
the legal obligations and consequences that SIMS was
subject to in Washington through the execution and
issuance of the securities and the default provisions under
the terms of the agreement decisively reinforce its deliber-
ate affiliation with the forum and the foreseeability of
litigation there. Through the agreement, its conduct and
specific connections with Washington confirm that it
should reasonably anticipate being haled into court there.
See World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297 (1980). SIMS purposefully availed itself of the
benefits and protections of Washington’s laws by becoming
obligated under an agreement providing that its forum
and those laws would govern disputes, Burger King, 471
U.S., at 482, and has purposefully established contacts

Certificate is not valid until countersigned by the Transfer Agent. IN
WITNESS WHEREOF, the Corporation has caused this Certificate to
be signed by the facsimile signatures of its duly authorized officers and
to be sealed with the facsimile seal of the Corporation.” The certificates
are identical and equally state share ownership. Contrary to the
respondents’ arguments, however, the shares cannot be traced to a
prior owner. See infra, pg. 28.

24

with Washington that create a substantial connection with
the forum state. Asahi Metal Industry, 480 U.S., at 112.’

The decisions in the present case conflict with the
rationales of the Burger King, World-Wide Volkswagen,
The Bremen, and Carnival Cruise Lines cases. As in
Burger King, the parties entered a freely negotiated
agreement with future consequences and continuing legal
obligations- in the forum, and the agreements in like
manner have choice-of-law provisions. Congruous with
World-Wide Volkswagen, the execution and issuance of the
securities and the default provisions under the terms of
the agreement conclusively reinforce its deliberate affilia-
tion with the forum and the foreseeability of litigation
there. Moreover, like The Bremen and Carnival Cruise
Lines cases, the agreement has a forum clause providing
for jurisdiction in Washington, and the parties therefore
cannot reasonably claim the element of surprise at being
hailed to answer in Washington for defaults or breaches of
the agreement.

" Ninth Circuit decisions also provide a basis for concluding that
SIMS is a party to the agreement. Under Washington law, the stock
certificates that were signed by the President and Secretary of SIMS,
on behalf of SIMS, and the issuance of SIMS Communications stock as
required by the agreement, are “documents that relate to the same
subject matter and that were executed as part of the same transaction,”
and collectively would be construed as an agreement or contract
between SIMS, the respondents, and the plaintiffs. See Parker v.
BankAmerica Corp., 50 F.3d, at 763 (citing Turner v. Wexler, 14 Wn.
App. 143, 146, 538 P.2d 877 (1975)). Moreover, the individual respon-
dents were general agents of the corporation when the agreement was
entered in September 1995, and the certificates were executed by them
in representative capacities for the corporation. An agency relationship
is material to jurisdiction, and consistent with these facts, satisfies the
presence requirement and will subject a non-resident entity like SIMS
to jurisdiction in Washington. See Chan v. Society Expeditions, Inc., 39
F.3d, at 1405-07.

25

Despite the cogent grip of these jurisdictional facts,
the decision held that specific jurisdiction is lacking
because SIMS was not a party to the agreement. (App., 6a
n.2). Beyond this, even if the decisions were deemed not
necessarily to conflict with those cases, it nevertheless
raises an important issue of federal constitutional law that
should be resolved by this Court. While the above cases all
bear on this issue, this Court has never decided a case
raising the explicit question of the exercise of specific
jurisdiction and application of a forum clause to a party
like SIMS Communications in this case.

Finally, it should be stated that SIMS did not show in
the state courts that other factors outweigh the purposeful
contacts it established in Washington through the agree-
ment. There was no showing, for example, that the litiga-
tion in Washington severely impairs its ability to call
witnesses in support of its defenses. At the time of the
agreement, SIMS was doing business nationally (at least
20 states, R. 386), and it is no less convenient for it to
appear here than it is in these other statés. Also, the
respondents, as officers and directors of a public company,
are clearly seasoned in business, were represented by
Florida counsel throughout the negotiations consummat-
ing the agreement, and did not otherwise show how
jurisdiction in Washington would be fundamentally unfair.
The exercise of specific jurisdiction over SIMS in this case
is constitutional, and does not offend due process.

Iil.

THE DECISION RAISES IMPORTANT
QUESTIONS OF FEDERAL LAW, AND CONFLICTS
WITH THE REASONING OF THIS COURT’S
DUE PROCESS DECISIONS IN THE RICHARDS,
LOGAN, BELL, AND BODDIE CASES

The constitutional issues under the Securities Act of
1933 are based on the Due Process Clause of the Four-
teenth Amendment and the insular dismissal of these

26

claims contrary to due process considerations and this
Court’s holdings in a number of important cases. The
decision of the Washington Court of Appeals affirming the
dismissal of these claims is based on Litho Color, Inc. v.
Pac. Employers Ins. Co., 98 Wn. App. 286, 991 P.2d 638
(1999), and the absence of argument on the claims. (App.
8a). The claims under the Securities Act of 1933, however,
are based on Rule 144 and were extensively briefed in the
appeal. (Court of Appeals October 2000 brief). The decision
touches the arguments on Rule 144, but in the relevant
respect, declines to address the issues noting that the
latter argument was never before the trial court. (App., pp.
12a-13a). The status of this important claim is that it has
been dismissed, when argument was presented on these
issues.

“Many controversies have raged about ... the Due
Process Clause” but it is fundamental that “except in
emergency situations (and this is not one) due process
requires that when a State seeks to terminate an interest
such as that involved here, it must afford ‘notice and
opportunity for hearing appropriate to the nature of the
case’ before the termination becomes effective.” Bell v.
Burson, 402 U.S. 535, 542 (1971); Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950). The
inquiry under the Court’s holding in Mullane is whether
there has been a deprivation of a protected interest and, if
so, what process is due. Logan v. Zimmerman Brush Co.,
455 U.S. 422, 428 (1982).

In a number of this Court’s cases, it has been held
that a cause of action is a form of property protected by the
Due Process Clause of the Fourteenth Amendment. Rich-
ards v. Jefferson County, 517 U.S. 793, 804 (1996); Logan,
455 U.S., at 428. In Mullane, the Court held that a statute
providing for notice by publication in a newspaper to trust
beneficiaries, although sufficient for beneficiaries whose
interests or addresses were unknown to the trustee, was
not sufficient notice for known beneficiaries under the Due
Process Clause because the effect of the statute was to

27

terminate “every right which beneficiaries would other-
wise have against the trust company ... for improper
management of the common trust fund.” 339 U.S., at 311.
The Court held that this had the effect of depriving trust
beneficiaries of property because it “cut off their rights to
have the trustee answer for negligent or illegal impair-
ments of their interests.” Jd., at 313. Similarly, in Societe
Internationale v. Rogers, 357 U.S. 197 (1958), this Court
held that a party's claim could not be dismissed for non-
compliance with a discovery order, when the failure to
comply with the order was due to inability, and not to ~
willfulness, bad faith, or any fault of the party. This is
because the Due Process Clause of the Fifth Amendment
imposes “constitutional limitations upon the power of
courts, even in aid of their own valid processes, to dismiss
an action without affording a party the opportunity for a
hearing on the merits of his cause.” Jd., at 209-13.

The Court’s holdings in Mullane and Logan, of course,
have similarly interpreted the Due Process Clause of the
Fourteenth Amendment. Mullane, 339 U.S., at 311-15;
Logan, 455 U.S., at 433-37. In this framework, the Due
Process Clause has been held to prevent the States from
denying individuals the use of established adjudicatory
procedures, when the denial would be the “equivalent of
denying them an opportunity to be heard upon their
claimed right{s].” Id., at 429-30; Boddie v. Connecticut, 401
U.S. 371, 380 (1971). The rejection of these rights in this
case shares the characteristics of these cases. In this
respect, the right to established state procedures under
the Securities Act of 1933 and Rule 144 is guaranteed by
statute and court rules, and like a driver’s license or an
FEPA claim, is no less of an entitlement grounded in state
(and federal) law. See Bell, 402 U.S., at 539; Logan, 455
U.S., at 431.

Rule 144 was adopted in 1972 under the Securities
Act of 1933. Release No. 33-5223 (January 11, 1972)
(37 Fed. Reg. 591]. When the rule is complied with, a
safe harbor from liability exists under the registration

28

provisions of the Act for resales of restricted and control
securities. Release No. 33-7390 (February 28, 1997) [62
Fed. Reg. 9242-43]. The rule permits the public sale in
ordinary trading transactions of limited amounts of
securities owned by persons controlling, controlled by, or
under common control with the issuer (i.e., “affiliates”).°
Steinberg & Kempler, The Application and Effectiveness of
SEC Rule 144, 49 Ohio State L. Rev. 473, 474 (1988)
(citing Rule 144, 17 C.F.R. § 230.144 (1995)).

The merits of the claims under the 1933 Act and Rule
144 are substantial. Discovery preceding the motion for
partial summary judgment bears out that the certificates
issued under the agreement cannot be traced to a prior
owner, and that their shares originated from SIMS, as
opposed to shares owned or controlled by the respondents.”

* An affiliate of an issuer is a person that directly or indirectly
controls, or is controlled by, or is under common control with, such
issuer. 17 C.F.R. § 230.144(aX(1) (1995). At the time of the agreement,
the respondents’ collective holdings in SIMS constituted 27% (approxi-
mately 1,836,346 or 9% each) of the outstanding stock of the company.
(R. 989, 912-14). Respondents were clearly affiliates of SIMS and had
control positions in the company when the shares were transferred
under the agreement. (CP 996-97).

* Rule 144(d)(1) provides that restricted securities may be sold
under the rule only if they have been beneficially owned for at least two
years prior to the sale, and if the acquiror takes the securities by
purchase, the two year period does not begin to run until the full
purchase price or other consideration is paid or given by the person
acquiring the securities from the issuer or from an affiliate of the
issuer. 17 C.F.R. § 230.144(d\(1) (1995).

In their depositions, the respondents in essence stated that none of
the stock that was issued under the agreement came from them, that
they didn’t know who the stock came from (R. 952, 957-58), and that
they weren’t sure what shares were issued. (R. 942-46). In document
requests with the depositions, respondents were asked to produce all
documents showing that the shares were issued in accordance with
Rule 144. (R. 960-69). The response was that Rule 144 was not impli-
cated in the transactions under the agreement, and that no documents

(Continued on following page)

29

Even after lengthy discovery, the respondents cannot show
where the shares came from or when the shares in SIMS
were acquired they maintain were transferred under the
agreement. The substantiality of the evidence standard
described in Logan, 455 U.S., at 431, is comparable to a
summary judgment standard where the burden on the
moving party may be discharged by showing the absence
of a genuine issue of material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986); Washington Civil Rule 56(c);
Honey v. Davis, 131 Wn.2d 212, 217, 930 P.2d 908 (1997).
The Court’s holdings in Martinez v. California, 444 U.S.
277 (1980), and later in Logan, reflect that the burden of
proof as an element in a summary judgment setting is an
aspect of the property interest. See Martinez, 444 U.S., at
282 n.5; Logan, 455 U.S., at 433.

As the case presently stands, the pared dismissal of
the 1933 Act as a theory of relief bars the assertion of
these claims. That there can be no doubt about this mes-
merizing conclusion is decisively reinforced by the denial
of a motion for reconsideration on this very issue, in which
a clarification was sought that the claims under the 1933
Act and Rule 144 remain viable in this case. (1/7/02
Motion for Reconsideration). The decision on this issue is
in conflict with Bell v. Burson, supra, because it has
eliminated consideration of liability factors from its
decision contrary to due process. See 402 U.S., at 541.
There is no paramount difference between the termination

exist as to these requests. (R. 970-78). In discovery requests sent and
answered months later (February and June 1999), the answers state
that the shares were owned by the respondents prior to being trans-
ferred under the agreement, that the shares were acquired by them
when the company was founded, and on documentation of prior
ownership, no documents were identified or produced. (R. 990-95, 998-
01).

30

of the cause of action here, and the causes of action in the
Richards, Logan and Bell cases. The decision dismissing
the basis for relief in the present case involves some of
these same questions, but in a different context. The
similarity is that in those cases, a wrongful deprivation of
property occurred through an application of the law by the
state courts which deprived a party of a claim or chose in
action without the safeguards of due process. When the
absent procedures would have provided protection against
arbitrary and inaccurate adjudication, this Court has not
hesitated to find the proceedings violative of due process.
Honda Motor Co. v. Oberg, 512 U.S. 415, 430 (1994). What
the Fourteenth Amendment requires, as the Court has
held in an important line of cases, is an opportunity
granted at a meaningful time and in a meaningful man-
ner, Armstrong v. Manzo, 380 U.S. 545, 552 (1965), for a
hearing appropriate to the nature of the case. Mullane,
339 U.S., at 313; Boddie v. Connecticut, 401 U.S., at 378.
This is the essential and constitutionally protected oppor-
tunity that has been denied by the dismissal of this
important claim in this case.

CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted,

JOHN M. KEEFE

1120 Fremont Avenue
South Pasadena, CA 91030
(626) 441-3263

Counsel For Petitioner

la

A majority of the panel has
determined that this opinion
will not be printed in the
Washington Appellate reports
but will be filed for public record
pursuant to RCW 2.06.040. IT
IS SO ORDERED

/s/ Susan R. Agid

IN THE COURT OF APPEALS
OF THE STATE OF WASHINGTON

THOMAS A. CACCIOLA and _) NO. 45616-4-1
MARLENE CACCIOLA.

husband and wife: PETER ) DIVISION ONE
VETRANO and LENA
VETRANO, husband and wife,

Appellants,

v. ) Unpublished Opinion

SIMS COMMUNICATIONS, FILED: DEC 17 2001
INC., a Delaware corporation;
MELVIN LEINER and JANE
DOE LEINER, individually and
as a marital community;
DARREN N. MARKS and

JANE DOE MARKS, individu-
ally and as a marital community;
JAMES J. CAPRIO and JANE
DOE CAPRIO, individually and ?
as a marital community, )

)
Respondents. )

Nee eee ee ee ae

COLEMAN, J. — Appellants Thomas Cacciola, Peter
Vetrano, and their spouses come before this court on
appeal from dismissal of their claims against respondents

2a

SIMS Communications, Inc., and several named individu-
als. The appellants argue that the trial court: (1) abused
its discretion by denying their discovery request for
original deposition recordings; (2) erred by granting
respondents’ motion for summary judgment; and (3) erred
by holding the appellants’ attorney jointly liable for
attorney fees and costs awarded to respondents. For the
reasons set forth below, we affirm the trial court’s dis-
missal of all but one of the appellants’ claims. The portion
of the trial court’s order dismissing the appellants’ state
Securities Act claim is reversed and remanded for further
proceedings consistent with this opinion. In addition, the
trial court’s order on the respondents’ motion for fees and
costs is reversed with directions to vacate or for entry of
findings sufficient to support an award against the appel-
lants’ attorney.

FACTS

This case arises out of the alleged wrongful conduct of
respondents SIMS Communications, Melvin Leiner, James
Caprio, and Darren Marks with respect to a settlement
agreement they entered into with appellants Thomas
Cacciola and Peter Vetrano. Pursuant to the agreement,
Leiner, Caprio, and Marks transferred 55,554 shares of
their personally held restricted SIMS stock to the appel-
lants (27,777 each) and paid them $17,500 in cash. At the
time of the settlement agreement, Leiner, Caprio,. and
Marks were corporate officers and directors of SIMS. At
that time, SIMS securities were traded on the NASDAQ
(National Association of Securities Dealers Automated
Quotation System). The agreement provided that it was to
be enforced under Washington law and in the event of
litigation, adjudicated in the state or federal courts in
King County.

3a.

Approximately six months after the parties entered
the settlement agreement, SIMS effected a 10 for 1 reverse
split of its common stock. Approximately two years later,
SIMS effected another reverse split, this time at a 4 for 1
ratio. As a result of these reverse splits, the appellants’
holdings were reduced from 27,777 to 694. Over the course
of these two and one-half years, the value of SIMS stock
decreased significantly.

In September 1997, appellants filed suit against
SIMS, Leiner, Caprio, and Marks alleging violations of the
Securities Act of Washington, fraud, negligent misrepre-
sentation, breach of fiduciary duty, violations of the
Securities Act of 1933, violations of 18 U.S.C. sec. 1962
(Racketeer Influence and Corrupt Organizations Act
(RICO)) and violations of Washington’s Consumer Protec-
tion Act. After the appellants’ claims were dismissed on
respondents’ summary judgment motion, appellants
initiated this appeal.

DISCUSSION
1. Jurisdiction

One of the bases for the trial court’s dismissal of the
appellants’ claims was its conclusion that it lacked per-
sonal jurisdiction over SIMS. Where the underlying facts
are undisputed, the trial court’s assertion of personal
jurisdiction is a question of law reviewable de novo. Lewis
v. Bours, 119 Wn.2d 667, 669, 835 P.2d 221 (1992). The
party asserting jurisdiction has the burden of proof. CTVC
of Hawaii, Co. v. Shinawatra, 82 Wn.App. 699, 708, 919
P.2d 1243 (1996).

Washington state courts may exercise either general or
specific personal jurisdiction over a nonresident defendant.

4a

RCW 4.28.080(10)' MBM Fisheries, Inc. v. Bollinger Mach.
Shop & Shipyard, Inc., 60 Wn.App. 414, 418, 804 P.2d 627
(1991); “General jurisdiction over a nonresident defendant
is proper when the defendant's actions in the state are so
substantial and continuous that justice allows the exercise
of jurisdiction even for claims not arising from the defen-
dant’s contacts within the state.” Raymond v. Robinson,
104 Wn.App. 627, 633, 15 P.3d 697 (2001). Because the
exercise of general jurisdiction turns upon the extent of
the defendant's contacts with the forum state, jurisdiction
must be determined on a case-by-case basis.

In Raymond, the defendant company had no offices or
agents in Washington, but it advertised its products to
Washington consumers through mailings and magazines,
negotiated sales with Washington consumers over the
phone and through the mail, authorized warranty repairs
on its products in Washington, and sent technicians to
service its products in Washington. Raymond, 104
Wn.App. at 633-34. The court concluded that the defen-
dant’s contacts were not substantial enough to justify the
exercise of general jurisdiction.

* RCW 4.28.080 sets forth the requirements for service of sum-
monses in Washington and has been interpreted as the basis for
general jurisdiction:

The summons shall be served by delivering a copy thereof, as
follows:

(10) If the suit be against a foreign corporation or nonresident joint
stock company, partnership or association doing business within this
state, to any agent cashier or secretary thereof.

5a

Similarly, in Banton v. Opryland, U.S.A., Inc., 53
Wn.App. 409, 767 P.2d 584 (1989), overruled on other
grounds, Shute v. Carnival Cruise Lines, 113 Wash.2d 763,
783 P.2d 78 (1989), this court held that the defendant
company’s contacts with Washington were not sufficient to
subject it to the general jurisdiction of the trial court. In
Banton, the court noted that cases affirming the exercise
of general jurisdiction “generally require extensive in-
volvement by the corporation within Washington.” Banton,
53 Wn.App. 416. There, a Washington resident was in-
jured during a visit to defendant Opry’s facilities in Nash-
ville, Tennessee and filed a claim against Opry in
Washington. Opry’s contacts with Washington included
promotional presentations, radio broadcasts, and commis-
sions paid to Washington travel agents who booked trips to
its Nashville facilities. The court concluded that these
contacts did not suggest continuous involvement by Opry
in Washington and were not enough to exercise general
jurisdiction. Banton, 53 Wn.App. at 418.

By contrast, the court in Hartley v. Am. Contract
Bridge League, 61 Wn.App. 600, 812 P.2d 109 (1991), held
that the defendant bridge league had sufficient contacts
with Washington to subject it to the general jurisdiction of -
the state courts. The court based its decision upon the
“continuous and substantial” activities of the league,
including organizing tournaments in Washington, selling
and transporting bridge supplies in Washington, charging
and collecting tournament fees from Washington resi-
dents, and determining which Washington residents could
participate in the bridge tournaments. Hartley, 61
Wn.App. at 606.

In this case, it is undisputed that SIMS rented cellu-
lar telephones via automated dispensing machines at

6a

several Alamo car rental outlets in Washington from
January 1995 to May 1996. This 17-month rental opera-
tion, however, apparently defines the extent of SIMS’s
contact with Washington. The appellants have presented
no evidence that SIMS had offices, employees, or agents in
this state. The total amount of revenue gleaned from this
venture was less than $12,000. Although these facts place
this case somewhere between the factual scenarios in the
cases discussed above, we conclude that SIMS’s contacts
with this state are not sufficient to support the exercise of
general jurisdiction.” The trial ‘court’s dismissal of SIMS
for lack of personal jurisdiction is affirmed.

2. Appellants’ Discovery Request

A trial court’s discovery ruling “will not be disturbed
on review except on a clear showing of abuse of discretion,
that is, discretion manifestly unreasonable, or exercised on
untenable grounds, or for untenable reasons.” Doe v. Puget
Sound Blood Ctr., 117 Wn.2d 772, 778, 819 P.2d 370 (1991)
(quoting State ex rel. Carroll v. Junker, 79 Wn.2d 12, 26,
482 P.2d 775 (1971)). CR 26(b) dictates the scope and
limits of discovery:

* The appellants also argue that SIMS is subject to specific
jurisdiction in Washington courts under the settlement agreement’s
choice of forum clause. Because SIMS was not a party to the agreement,
however, the appellants’ argument fails. Specific jurisdiction over the
other individual respondents is proper. See Kysar v. Lambert, 76
Wn.App. 470, 484-85, 887 P.2d 431 (1995) (An agreement that shows
consent to personal jurisdiction is to be respected unless enforcement
would be unreasonable and unjust.).

7a

(1) In General. Parties may obtain discovery
regarding any matter, not privileged which is
relevant to the subject matter involved in the
pending action. ... It is not ground for objection
that the information sought will be inadmissible
at the trial if the information sought appears
reasonably calculated to lead to the discovery of
admissible evidence.

The frequency or extent of use of the discov-
ery methods ... shall be limited by the court if it
determines that: (A) the discovery sought is un-
reasonably cumulative or duplicative, or is ob-
tainable from some other source that is more
convenient, less burdensome, or less expensive;
(B) the party seeking discovery has had ample
opportunity by discovery in the action to obtain
the infermation sought; or (C) the discovery is
unduly burdensome or expensive, taking into ac-
count the needs of the case, the amount in con-
troversy, limitations on the parties’ resources,
and the importance of the issues at stake in the
litigation[.]

The appellants moved the trial court for an order to
obtain the original recordings from the depositions of
Thomas Cacciola and Peter Vetrano. Appellants argued
that they needed access to the original recordings “[fJor
purposes of authenticity and any minor differences there
may be between the original recordings and the tran-
scribed versions[.]” Stating that the appellants had failed
to show good cause for production of the original re-
cordings, the trial court denied their motion.

The trial court did not abuse its discretion by denying
the appellants’ request for the original deposition re-
cordings. Because the appellants already had access to the

8a

deposition transcripts, their request for the recordings was
duplicative. Furthermore, in light of the appellants’
admitted purpose in seeking the recordings — i.e., to look
for minor differences between the recordings and the
transcripts — their request was unduly burdensome and
unlikely to lead to information “relevant to the subject
matter in the pending action[.]” CR 26(b)(1). We uphold
the trial court’s denial of the appellants’ request for access
to the deposition recordings.

3. Respondents’ Motion for Summary Judgment

This court reviews orders of summary judgment de
novo and engages in the same inquiry as the trial court,
“treating all facts and reasonable inferences from the facts
in a light most favorable to the nonmoving party.” Enter.
Leasing, Inc. v. City of Tacoma, 139 Wn.2d 546, 551, 988
P.2d 961 (1999). Summary judgment should be granted
when there exist no genuine issues of material fact and
the moving party is entitled to judgment as a matter of
law. Kuhlman v. Thomas, 78 Wn.App. 115, 119, 897 P.
365 (1995).

The appellants assign error to the trial court's dis-
missal of their claims against SIMS and the named indi-
vidual defendants. A substantial impediment to their
success on appeal, however, is pesed by their complete
failure to present argument on all but one of their claims.
See Litho Color, Inc. v. Pac. Employers Ins. Co., 98
Wn.App. 286, 297, 991 P.2d 638 (1999) (“An argument will
not be considered if it is inadequately briefed.”). Appel-
lants have complied with RAP 10.3(aX3) by assigning
error generally to the trial court's t of summary
judgment for respondents. Apparently, appellants intend

y. 9a

f
this sweeping assignment of error to be read to imply

particularized allegations of error as to each of their
claims. The appellants have failed, however, to proffer any
argument on all but one of their claims. Accordingly, we
the dismissal of appellants’ claims for fraud, negli-
misrepresentation, breach of fiduciary duty, violation
of Securities Act of 1933, violation of 18 U.S.C. sec. 1962
RICO), and violation of the Washington Consumer Protec-
tion Act.

A. Violation of Title 21 RCW: Securities Act of
Washington

Appellants claim that respondents Leiner, Marks, and
Caprio violated the Securities Act of Washington in the -
transfer of SIMS securities under the settlement agree-
ment. Specifically, appellants argue that respondents
violated RCW 21.20.010:

Unlawful offers, sales, purchases. It is
unlawful for any person, in connection with the
offer, sale, or purchase of any security, directly or
indirectly:

(1) To employ any device, scheme, or artifice
to defraud;

(2) To make any untrue statement of a mate-
rial fact or to omit to state a material fact neces-
sary in order to make the statemenis made, in
the light of the circumstances under which they
are made, not misleading; or

10a

(3) To engage in any act practice, or course of
business which operates or would operate as a
fraud or deceit upon any person.’

Appellants assert that the respondents failed to
disclose material facts regarding the true financial status
of SIMS at the time of the settlement agreement. While
neither Cacciola nor Vetrano have any personal knowledge
of the facts surrounding the negotiation of the settlement
agreement, their attorney, [appellant’s counsel], acted as
their agent‘ and filed a declaration on his clients’ behalf.
In his declaration, [appellant’s counsel] stated that he was
never informed “about SIMS’ losses or that it was not
profitable prior to, contemporaneously with, or subsequent
to the settlement agreement” and that his discussions with
respondents’ attorney “never addressed or touched on the
subject of SIMS’ financial condition and its losses, or its
recurring history of losses at that time.” [appellant’s
counsel] also stated that after the settlement agreement
was signed, he asked respondents for financial documents
about the SIMS company but was told that they were
being prepared but were not yet available.

* The terms ‘sale’ and ‘sell’ are defined to include ‘every contract of
sale of, contract to sell, or disposition of, a security interest in a security
for value. ...’ RCW 21.20.005(10).

* "Representations made to a third person with the intent that they
be shown or communicated to the complainant may properly be relied
on by the latter[.]” 37 C.J.S. Fraud sec. 46 (1997) (footnote omitted). See
also, Joseph v. Norman LaPorte Realty, Inc., 508 So. 2d 496, 497 (Fla.
App. 3d Dist. 1987) (The fact that alleged fraudulent misprepresenta-
tions were made to plaintiffs’ agent cannot negate the element of
reliance when the agent relied on the defendant’s mispresentations and
the plaintiffs in turn relied on their agent’s report.).

-lla

Respondents’ main argument in response to appel-
lants’ Securities Act claim is that Cacciola and Vetrano
lack personal knowledge regarding the settlement agree-
ment. Respondents dismiss the argument regarding
[appellant's counsel] involvement as appellants’ agent by
suggesting that he was informed of SIMS3 true financial
status but withheld that information from his clients. As
support for their position, respondents point to a letter
from respondent Leiner to his attorney requesting changes
to the proposed settlement agreement. Most importantly,
in that letter Leiner requests that the agreement be
changed to reflect the fact that SIMS was not profitable.
In his declaration filed in support of respondents’ motion
for summary judgment, counsel for respondents stated
that he specifically discussed this change with [appellant’s
counsel] and that [appellant’s counsel] complied with
Leiner’s request by removing language in the agreement
_ referencing the company’s profitability. In response,
[appellant’s counsel] argues that he was never made aware
of the proposed change and points out that the letter from
Leiner was dated the day after appellants signed the
settlement agreement.

These contrasting accounts of the events surrounding
the settlement agreement expose the existence of a dis-
puted issue of material fact: Did respondents withhold
information from the appellants pertaining to the financial
status of SIMS at the time of the settlement agreement?
This issue constitutes the backbone of appellants’ Securi-
ties Act claim —i.e., an omission of a material fact.* In light

* A fact is considered “material” if it consists of information to
which a reasonable person would attach importance in determining his
choice of action in a given transaction. Clausing v. DeHart, 83 Wn.2d

(Continued on following page)

12a

of this disputed issue of fact, the trial court’s dismissal of
appellants’ Securities Act claim is reversed.

B. Securities & Exchange Commission (SEC)
Rule 144

The appellants moved the trial court for partial
summary judgment under SEC Rule 144. Due to changes
in the case schedule, the motion was stricken and set to be
renoted at a later date. Before the appellants’ summary
judgment motion was renoted, however, the trial court
granted summary judgment for the respondents and
dismissed all of the appellants’ claims. In its order denying
the appellants’ motion for reconsideration, the trial court
stated that their motion for partial summary judgment
was made moot by the intervening order dismissing their
claims.

On appeal, the appellants have attempted to resurrect
their argument regarding respondents’ alleged violation of
SEC Rule 144 by assigning error to the trial court’s “fail-
ing to grant plaintiff’s motion for partial summary judg-
ment ... and [its] ruling that the motion was mooted by
the grant of summary judgment in the defendants’ favor.”
Brief of Appellants, at 1. But as the respondents are quick
to point out, the appellants’ argument regarding SEC Rule
144 is not properly before this court.

70, 515 P.2d 982 (1973). Appellants have stated that they would not
have accepted SIMS securities in the settlement agreement if they had
known that SIMS was not profitable. See Deposition of Cacciola, at
Clerk’s Papers 1447-48.

13a

The appellants’ argument regarding respondents’
alleged violation of SEC Rule 144 was not before the trial
court in its consideration of respondents’ motion for
summary judgment. Rather, it was first raised in the
appellants’ motion for partial summary judgment — which
was not noted on the trial court’s calendar until after the
court had granted -ummary judgment for the respondents.
Moreover, the appellants’ motion for partial summary
judgment was explicitly rejected by the trial court as moot
because all of their claims had already been dismissed.
Thus, because the appellants’ SEC Rule 144 argument was
never actually before the trial court, we decline to address
it on appeal. See RAP 9.12 (“On review of an order grant-
ing or denying a motion for summary judgment the appel-
late court will consider only evidence and issues called to
the attention of the trial court. ... ”).

5. Attorney Fees

In general, attorney fees are not recoverable by the
prevailing party absent a contract, statute, or recognized
ground of equity. Hillis v. Dept. of Ecology, 131 Wn.2d 373,
401, 932 P.2d 139 (1997). In addition, CR 11° and a court’s
inherent equitable powers authorize the award of attorney
fees in cases of bad faith. In Re Recall of Pearsall-Stipek,
136 Wn.2d 255, 267, 961 P2d 343 (1998). An award of
attorney fees is left to the trial court’s discretion and will
not be disturbed absent a clear showing of abuse. Fluke

* CR 11 authorizes the imposition of sanctions against a party or
attorney for filing pleadings or motions that are not grounded in fact or
law. Biggs v. Vail, 124 Wn.2d 193, 201, 876 P.2d 448 (1994).

ee

14a

Capital & Mgmt. Servs. Co. v. Richmond, 106 Wn.2d 614,
625, 724 P.2d 356 (1986).

In this case, when the trial court entered its order on
respondents’ motion for summary judgment, it reserved its
ruling on attorney fees. The court also crossed out lan-
guage in the order relating to imposition of CR 11 sanc-
tions against the appellants’ attorney and, instead, noted
that “[clounsel’s arguments did not prevail but were not
frivolous; however, counsel is warnec vnat if this case were
to go further, he would be an essential witness, might have
a conflict of interest, and should consider advising his
clients to obtain separate counsel.” Approximately two
months later, the trial court ordered that “defendants are
awarded a judgment against the plaintiffs and/or their
attorney of record, John Keefe, in the sum of $47,865.90.”

Respondents argue that the trial court properly
imposed attorney fees against appellants’ counsel for bad
faith. In light of the trial court’s explicit rejection of CR 11
as a basis for sanctions against appellants’ counsel, how-
ever, the award is seemingly baseless. The trial court's
order on respondents’ motion for fees and costs is re-
manded with instructions to vacate or for entry of findings
sufficient to support an award against appellants’ attor-
ney.

Dismissal of appellants’ fraud, negligent misrep-
resentation, breach of fiduciary duty, Securities Act of
1933, 18 U.S.C. sec. 1962 (RICO), and Washington Con-
sumer Protection Act claims is affirmed. The portion of the
trial court’s order dismissing appellants’ state Securities
Act claim is reversed and remanded for further proceed-
ings consistent with this opinion. The trial court’s order on
the respondents’ motion for fees and costs is reversed with

a

15a

directions to vacate or for entry of findings sufficient to
support an award against appellants’ attorney.

/s/ Coleman, J

WE CONCUR:
/s/ Kennedy J /s/ Becker, A. C.J.

16a

THE SUPREME COURT
STATE OF WASHINGTON
[SEAL]

TEMPLE OF JUSTICE
P.O. BOX 40929
OLYMPIA, WA

98504-0929
(360) 357-2077
Fax (360) 357-2102
e-mail: su-
preme@courts,wa.gov
www.courts.wa.gov

September 20, 2002

C.J. MERRITT
SUPREME COURT CLERK
RONALD R. CARPENTER
DEPUTY CLERK/CHIEF
STAFF ATTORNEY

Mr. John Keefe Mr. David Kontos
Attorney at Law Attorney at Law
1120 Fremont Ave. 25422 74th Ave. South

South Pasadena, CA 91030 Kent, WA 98032

Hon. Richard Johnson, Court Admin/Clerk
Division I, Court of Appeals

One Union Square

600 University St

Seattle, WA 98101

Re: Supreme Court No. 72288-9 - Thomas & Marlene
Cacciola, et al. v. Sims Com., Inc., et al. Court of Ap-
peals No. 45616-4-1

Clerk & Counsel:

This will acknowledge receipt on September 20, 2062,
of the Petitioners’ “MOTION FOR RECONSIDERATION.”

17a

The pleading seeks reconsideration of this Court’s Sep-
tember 4, 2002 order denying the petition for review.

A denial of a petition for review is not subject to
reconsideration. The RULES OF APPELLATE PROCE-
DURE (RAP) provide that a party may file a motion for
reconsideration only of “a decision terminating review”,
see RAP 12.4(a). One element of “a decision terminating
review” is that it must be an opinion, order or judgment of
the appellate court filed after review is accepted, see RAP
12.3(a). A denial of a petition for review is an act declining
to accept review. As such, the Court’s decision on the
petition for review is not subject to reconsideration.

Accordingly, although the pleading has been placed in
the closed file, this court can take no further action on it.

Sincerely,

/s/ Ronald R. Carpenter
RONALD R. CARPENTER
Supreme Court Deputy Clerk

RRC:jaa

It is noted that the Department of the Court which denied the
petition for review was comprised of five of the nine Justices of this
Court, a majority of the Court.

18a’

THE SUPREME COURT OF WASHINGTON

THOMAS A. CACCIOLA and

MARLENE CACCIOLA,

husband and wife; PETER NO. 72288-9

VETRANO and LENA

VETRANO, husband and ORDER

wife. C/A NO. 45616-4-I
Petitioners, (Filed Sep. 4, 2002)

v.

SIMS COMMUNICATIONS,

INC., a Delaware corporation;

MELVIN LEINER and JANE

DOE LEINER, individually and
as a marital community;
DARREN M. MARKS and JANE
DOE MARKS, individually and
as a marital community; and
JAMES J. CAPRIO and JANE
DOE CAPRIO, individually and
as a marital community,

ee ee ee ee ee ee ee ee a ee Le ae ee a a a

Respondents.

Department I of the Court (composed of Chief Justice
Alexander and Justices Smith, Madsen, Ireland and
Chambers) considered this matter at its September 4,
2002, Motion Calendar, and unanimously agreed that the
following order be entered.

IT IS ORDERED:

That the Petition for Review is denied.

19a

DATED at Olympia, Washington this 4th day of
September, 2002.

/s/ Gerry L. Alexander
CHIEF JUSTICE

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_0823%3A1. Public record. Not legal advice.