GREGORY A RICE Appellant v ORIENTAL FIREWORKS COMPANY HORSE BRAND FIREWORKS CO TEMPLE OF HEAVEN BRAND FIREWORKS CO Defendants J C CHOU and J C ORIENTAL FIREWORKS INC a Maryland corporation Respondents ROY NE COMPANY FIREWORKS Defendant CA No A32672 COURT OF APPEALS OF OREGON 75 Ore App 627 707 P 2d 1250 1985 Ore App LEXIS 3928 March 15 1985 Argued and submitted October 9 1985 Filed SUBSEQUENT HISTORY 1 Argued and submitted March 15 1985 Reconsideration Denied November 22 1985 petition for review denied February 19 1986 Reconsideration Denied November 22 1985 Petition for Review Denied February 19 1986 300 Or 546 PRIOR HISTORY Appeal from Circuit Court Multnomah County Clifford B Olsen Judge No 8206 03933 DISPOSITION Reversed and remanded COUNSEL Larry N Sokol Portland argued the cause for appellant With him on the briefs was Jolles Sokol Bernstein P C Portland Peter R Chamberlain Portland argued the cause for respondents With him on the brief was Bodyfelt Mount Stroup Chamberlain Portland JUDGES Buttler Presiding Judge and Warren and Rossman Judges OPINIONBY WARREN OPINION 629 1253 Plaintiff appeals from a judgment dismissing his claim against J C Chou Chou for lack of personal jurisdiction Plaintiff filed this claim against inter alia n1 J C Oriental Fireworks Inc Oriental a Maryland corporation and Chou a Maryland resident for personal injuries he suffered while discharging fireworks distributed by Oriental or Chou n2 In a pretrial order ultimately reduced to the judgment appealed from the trial court granted Chou s 2 motion to dismiss for lack of personal jurisdiction Oriental then dismissed local counsel and allowed an uncontested judgment to be taken against it in the amount of approximately 432 000 Footnotes n1 Defendants Oriental Fireworks Company Horse Brand Fireworks Co Temple of Heaven Brand Fireworks Co and Roy Ne Company Fireworks were never served and therefore are not involved in this case n2 Defendant argues that plaintiff did not allege that Chou was personally liable for plaintiff s injuries The complaint is broad enough to admit proof that Chou in his personal capacity did all the acts alleged End Footnotes We reject plaintiff s contention that jurisdiction over Chou could also be based on a single visit to Oregon in 1979 during which he promoted his business A nonresident individual not served in Oregon is subject to the jurisdiction of an Oregon court only when he has had sufficient contacts with the state to satisfy the requirements of due process ORCP 4L see e g Helicopteros Nacionales de Colombia 3 v Hall 466 U S 408 104 S Ct 1868 80 L Ed 2d 404 1984 International Shoe Co v Washington 326 U S 310 66 S Ct 154 90 L Ed 95 1945 If an individual s contacts are substantial then he has a relationship with the state which warrants jurisdiction for all causes of action asserted against him Helicopteros Nacionales de Colombia v Hall supra 80 L Ed 2d at 411 However if as in this case the individual s activities are not so pervasive as to justify the exercise of general jurisdiction over him then jurisdiction depends on whether the action is related to or arises out of an individual s contacts with the state World Wide Volkswagen Corp v Woodson 444 U S 286 100 S Ct 559 62 L Ed 2d 490 1980 State ex rel Michelin v Wells 294 Or 296 657 P2d 207 1982 Although the Supreme Court has never determined what it means to say that a cause of action is related to or 630 arises out of a defendant s activities in the state Helicopteros Nacionales de Colombia v Hall supra 80 L Ed 2d at 414 20 Brennan J dissenting the Oregon Supreme Court in State ex rel Michelin v Wells supra 294 Or at 302 03 held that 4 a cause of action is related to or arises out of a defendant s contact with the state if that contact is substantively relevant to the cause of action In this case it is clear that although Chou s single visit to Oregon related to his business that visit was not substantively relevant to plaintiff s cause of action and therefore does not satisfy the requirements of due process Plaintiff also contends however that the trial court should have disregarded the corporate form of Chou s alter ego Oriental over which the court had undisputed jurisdiction and found personal jurisdiction over Chou We agree with that contention and reverse the judgment dismissing the claim against Chou The sole business of Oriental is to act as broker and distributor of professional display fireworks The corporation has grossed from 230 000 to 400 000 annually However its assets have never exceeded 13 182 and it has never obtained liability insurance even though as Chou stated accidents do occur and lawsuits arise as a general rule right after July 4th Chou also indicated that the lack of liability insurance motivates injured customers to bring actions against other 5 defendants Chou is the president and treasurer of Oriental His wife is vice president of the corporation and his Maryland attorney is its secretary Those officers who also 1254 comprise the corporation s board of directors have held their respective positions since the inception of the corporation in 1979 Chou stated that 5 000 shares of stock were authorized and issued when the corporation was formed with 45 percent going to himself 45 percent to his wife and 10 percent to his attorney However the record indicates that Chou owns 45 of the 90 shares issued by the corporation and his wife owns the other 45 There is no indication that the attorney was actually issued any shares There is also no evidence that any consideration was given for the shares issued Finally there are no records or minutes of meetings of the shareholders or directors of the corporation except for a signed form of unanimous consent by the board of directors in lieu of an organizational meeting 631 The first issue is whether the trial court s jurisdiction over Chou may be premised on its undisputed jurisdiction over Oriental and effected by disregarding the corporation 6 as a separate entity Three Supreme Court cases have indicated a willingness to entertain that principle North Pacific v Guarisco 293 Or 341 647 P2d 920 1982 State ex rel Sweere v Crookham 289 Or 3 609 P2d 361 1980 State ex rel Ware v Hieber 267 Or 124 515 P2d 721 1973 In North Pacific the plaintiff a judgment creditor brought an action against several individual and corporate defendants who had managed and controlled the insolvent corporate judgment debtor As in this case the plaintiff contended that the court
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