Murray Brand, Sydell Brand, Biarritz Motors, Inc. v. Menlove Dodge, Los Angeles Dealer Auto Auction, Menlove Dodge

Menlove Dodge appeals from a default judgment entered against it on fraud and negligence counts. Because the district court did not have personal jurisdiction over Menlove, we reverse.

BACKGROUND

Menlove is an auto dealership in Bountiful, Utah. In early 1980, Menlove purchased a used 1979 Toyota landcruiser from another dealer and promptly resold it. Four months later, the buyer returned the vehicle to Menlove upon discovering that the front-end assembly had been replaced with a front end from a 1972 model. Men-love then sold the vehicle to Wade Patterson, a Utah used car dealer. The parties dispute whether Kendall Cochrane of Men-love told Patterson about the rebuilt front end and whether Patterson told Cochrane he intended to take the Toyota to California for resale.

Patterson sold the vehicle at the Los Angeles Auto Auction in Rosemead, California, to Murray Brand, a Phoenix auto dealer. Brand sold it in Arizona. Brand’s customer had problems with the front end. En route to a Toyota dealership, the front wheels of the landcruiser broke apart. Litigation between Brand and the customer resulted in a jury verdict against Brand.

Brand brought suit in federal district court in…