Neogard Corp. v. Malott & Peterson-Grundy

The parties have raised a single, narrow issue: whether the State of California can temporarily prevent appellant Neogard Corporation from maintaining this lawsuit against appellee Malott & Peterson-Grundy without running afoul of the commerce clause of the United States Constitution. Specifically the issue is whether Neogard’s business efforts in California from 1965 to 1974 constituted sufficient local contact with this state to make it reasonable for the latter to enforce Corporations Code sections 2105 and 2203, subdivision (c), statutes designed to facilitate service of process on and to prevent tax evasion by out-of-state corporations. We conclude that Neogard’s local presence was extensive enough to make application of the statutes to it reasonable and we affirm the judgment entered below.

I

Neogard is a Texas corporation that markets a waterproofing system for certain floor surfaces in all 50 states. It is a wholly owned subsidiary of Jones-Blair Paint Company, also a Texas corporation. Jones-Blair manufactures a waterproofing solvent and is the licensee of a patented process for bonding the solvent. From 1965 to 1974 Neogard’s function in California was to…