Opinion ID: 1201127
Heading Depth: 2
Heading Rank: 3

Heading: does alaska's assertion of personal jurisdiction over anb violate due process?

Text: Alaska's long-arm statute, AS 09.05.015, authorizes its courts to assert jurisdiction to the maximum extent permitted by due process. Jonz v. Garrett/Airesearch Corp., 490 P.2d 1197, 1199 (Alaska 1971). [5] In Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 24 L.Ed. 565 (1877), the United States Supreme Court adopted the view that the authority of a court to summon a party before it to adjudicate a claim against that party is subject to constitutional limitations. [6] See 95 U.S. (5 Otto) at 733, 24 L.Ed. at 572. More specifically, the Court in Pennoyer held that judicial determination of the personal liability of a defendant satisfies due process if the defendant was served personally within the forum state. [7] Id. Subsequently, in International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 (1945), the Court held that, for purposes of obtaining in personam jurisdiction, due process requires a defendant to have minimum contacts with the forum state such that maintenance of the suit does not offend traditional notions of fair play and substantial justice. While numerous decisions of the Supreme Court have addressed the issue of personal jurisdiction, only a few have involved the factual circumstance of a single contract or transaction within the forum state. The case which most clearly approximates the factual context of the instant case is McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957). [8] In McGee, the beneficiary of a life insurance policy sued the insurance company that had assumed the obligation owed the insured by his insurer. In 1944, Lowell Franklin, a resident of California, purchased the subject life insurance policy from an Arizona insurance company. McGee, 355 U.S. at 221, 78 S.Ct. at 200, 2 L.Ed.2d at 225. In 1948, International Life Insurance Company (International Life) agreed with the Arizona insurer to assume its insurance obligations. International Life then mailed a reinsurance certificate to Franklin in California, offering to insure him under the terms of the policy he held with his original insurer. Id. He accepted the offer and paid premiums by mail from his California home to International Life's Texas office until he died in 1950. Id. at 221-22, 78 S.Ct. at 200-01, 2 L.Ed.2d at 225. Franklin's mother, McGee, was the beneficiary under the policy. She sent proofs of his death to International Life, but the company refused to pay, claiming that he had committed suicide. Id. Neither the original insurer nor International Life had ever had an office or agent in California, and as far as the record indicated, International Life had never solicited or done any insurance business in California apart from the Franklin policy. Id. McGee recovered a judgment in state court in California against International Life. Id. at 221, 78 S.Ct. at 200, 2 L.Ed.2d at 224-25. The California court based its jurisdiction on a state statute which subjects foreign corporations to suit in California on insurance contracts with residents of that state even though such corporations cannot be served with process within its borders. Id., 355 U.S. at 221, 78 S.Ct. at 200, 2 L.Ed.2d at 225. McGee was unable to collect the judgment in California, and consequently filed suit on the judgment in a Texas court. The Texas court refused to enforce the judgment, holding it void under the fourteenth amendment because service of process outside California could not give the California courts jurisdiction over International Life. Id. The Supreme Court held it sufficient for purposes of due process that the beneficiary's suit was based on a contract which had substantial connection with California. Id. at 223, 78 S.Ct. at 201, 2 L.Ed.2d at 226. The Court found it significant that the contract was delivered in California, the premiums were mailed from California, and the insured was a resident of California when he died. Id. The Court also stated: It cannot be denied that California has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. These residents would be at a severe disadvantage if they were forced to follow the insurance company to a distant State in order to hold it legally accountable. Id. Of particular significance to the resolution of the instant petition is the comparative analysis of McGee undertaken by the Court in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). In Hanson, the Court held that the courts of Florida could not assert personal jurisdiction over a Delaware trustee, even though the testatrix of the trust resided in Florida and received the trust income there. The petitioners in Hanson relied principally upon McGee in arguing that Florida's assertion of jurisdiction did not violate due process. The Supreme Court concluded that the Delaware trustee lacked the minimal contacts with Florida necessary for that state's exercise of jurisdiction over a defendant. The Court noted that the trust company had no office in Florida and transacted no business there. Id. at 251, 78 S.Ct. at 1238, 2 L.Ed.2d at 1296. None of the trust assets had ever been held or administered in Florida, and the record disclosed no solicitation of business in Florida either in person or by mail. Id. In distinguishing Hanson from McGee, the Court made the following comparison: The cause of action in this case is not one that arises out of an act done or transaction consummated in the forum State. In that respect, it differs from McGee v. International Life Ins. Co. 355 US 220, 2 L.ed.2d 223, 78 S Ct 199, and the cases there cited. In McGee, the nonresident defendant solicited a reinsurance agreement with a resident of California. The offer was accepted in that State, and the insurance premiums were mailed from there until the insured's death. Noting the interest California has in providing effective redress for its residents when nonresident insurers refuse to pay claims on insurance they have solicited in that State, the Court upheld jurisdiction because the suit was based on a contract which had substantial connection with that State. In contrast, this action involves the validity of an agreement that was entered without any connection with the forum State. The agreement was executed in Delaware by a trust company incorporated in that State and a settlor domiciled in Pennsylvania. The first relationship Florida had to the agreement was years later when the settlor became domiciled there, and the trustee remitted the trust income to her in that State. From Florida Mrs. Donner [the settlor] carried on several bits of trust administration that may be compared to the mailing of premiums in McGee. But the record discloses no instance in which the trustee performed any acts in Florida that bear the same relationship to the agreement as the solicitation in McGee. Id. at 251-52, 78 S.Ct. at 1238-39, 2 L.Ed.2d at 1296-97 (emphasis in original and footnote omitted). The Court concluded that Hanson thus could not be said to involve a suit to enforce an obligation that arose from a privilege the defendant exercised in Florida, id. at 252, 78 S.Ct. at 1239, 2 L.Ed.2d at 1297, and explained: [I]t is essential in each case that there be 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. 357 U.S. at 253, 78 S.Ct. at 1239, 2 L.Ed.2d at 1298, quoted in Modern Trailer Sales v. Traweek, 561 P.2d 1192, 1196 (Alaska 1977). Thus, the Supreme Court found the defendant's acts in purposefully avail[ing] itself of the privilege of conducting activities within the forum [s]tate in McGee to be a critical factor distinguishing that case from Hanson. See Kennecorp Mortg. & Equities v. First Nat'l Bank, 685 P.2d 1232, 1238 (Alaska 1984) (identifying nonresident defendant's purposeful activity with respect to the forum state as the primary inquiry in evaluating his contact with that state). In our view, the instant case is closer to McGee than to Hanson. Here ISAlaska's claim arises out of acts purposefully done in Alaska and a transaction consummated in Alaska. Acting on behalf of Ocean Products, ANB, a non-resident corporation, initiated contact with ISAlaska, an Alaska corporation doing business within Alaska. By letter dated December 7, 1982, addressed to ISAlaska in Kodiak, Alaska, ANB advised ISAlaska that: This document is given to you with our assurance that when proceeds are received under the above mentioned Letter of Credit, having been handled through our bank, we will forward these funds immediately to you. [Emphasis added.] [9] In reliance upon this direct assurance from ANB, ISAlaska delivered pollock to Kodiak to the ship arranged by Ocean Products for transporting the fish from Kodiak. Thereafter, on two separate occasions, ANB sent payments under the letter of credit to ISAlaska, in Kodiak, for the pollock it had delivered. In light of the foregoing, we think that ANB had the minimum contacts with Alaska necessary to satisfy due process concerns. ANB, the non-resident defendant, purposefully availed itself of the privilege of conducting business activities within Alaska, and thereby invoked the benefits and protections of Alaska's laws. The bank solicited ISAlaska's performance by giving the Alaska corporation its assurance of payment; this offer was accepted by ISAlaska in Alaska, and performance was rendered in Alaska. [10] We believe that Alaska has a valid interest in providing effective redress for its residents when a non-resident refuses to comply with the payment terms of a contract solicited in Alaska. Furthermore, it is evident that ANB knew that the consequences of its failure to transmit funds would impact this domestic corporation. The Supreme Court's recent decision in Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), does not dictate a contrary conclusion. There the Court stated: Jurisdiction in these circumstances may not be avoided merely because the defendant did not physically enter the forum State. Although territorial presence frequently will enhance a potential defendant's affiliation with a State and reinforce the reasonable foreseeability of suit there, it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. So long as a commercial actor's efforts are purposefully directed toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there. Id. 471 U.S. at 543, 105 S.Ct. at 2184, 85 L.Ed.2d at 543 (emphasis in original and citations omitted). The Court also reaffirmed that parties who reach out beyond one state and create continuing relationships and obligations with citizens of another state are subject to regulation and sanctions in that other state for the consequences of their activities. Id. 471 U.S. at 472, 105 S.Ct. at 2182, 85 L.Ed.2d at 541 (citations omitted). [11] We thus reach the final inquiry required by due process, namely whether Alaska's exercise of jurisdiction over ANB is reasonable  that is, whether the assertion of personal jurisdiction comports with fair play and substantial justice. [12] In making this determination, we are called upon to evaluate the burden on the defendant, the forum state's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and the shared interest of the states in furthering fundamental substantive social policies. See Burger King, 471 U.S. at 476, 105 S.Ct. at 2184, 85 L.Ed.2d at 543 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980)). [13] Where a defendant who has purposefully directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. [14] Burger King, 471 U.S. at 477, 105 S.Ct. at 2185, 85 L.Ed.2d at 544. Here we conclude that ANB, a non-resident corporation which purposefully directed its activities at an Alaska resident, has not demonstrated compelling circumstances which render Alaska's exercise of jurisdiction over ANB so unreasonable as to constitute a denial of due process. The hardships on the parties of litigating this case in Alaska or Tennessee appear balanced. The negotiations which formed the basis of the business relationship between ANB and ISAlaska occurred within Alaska. Alaska has an interest in resolving disputes which involve its resident corporations and in providing its residents with a means for convenient and effective relief. Kennecorp Mortgage, 685 P.2d at 1239 n. 5. AFFIRMED.