Opinion ID: 2588382
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Heading: S.A. 17-7307(c)

Text: Additionally, the plaintiff argues that Kansas specifically recognized general jurisdiction by adopting K.S.A. 17-7307(c), which provides: Any person having a cause of action against any foreign corporation, whether or not such corporation is qualified to do business in this state, which cause of action arose in Kansas out of such corporation doing business in Kansas, or arose while such corporation was doing business in Kansas, may file suit against the corporation in the proper court of a county in which there is proper venue. Two cases applying this provision support plaintiff's argument. Most recently, a federal district court concluded Kansas has chosen to exercise general jurisdiction over foreign corporations by adopting K.S.A. 17-7307(c). Scharff v. CRST, Inc., 2002 WL 922131 (D. Kan. unpublished opinion filed May 2, 2002). In Scharff, the plaintiff was injured in an auto accident in California. He filed suit in Kansas against the defendants, three Iowa corporations which were doing business in Kansas at the time of the accident. The defendants moved to dismiss for lack of personal jurisdiction, arguing that the accident in California was unrelated to any business they conducted in Kansas. However, the plaintiff asserted jurisdiction under K.S.A. 17-7307(c), not the long arm statute. While the defendants had not applied for a certificate of authority to do business in Kansas pursuant to K.S.A.2005 Supp. 17-7301, the court found they were doing business in Kansas such that K.S.A. 17-7307(c) was satisfied. Scharff, at -3. The Scharff court cited Novak, and a case discussed therein, State ex rel. K-Mart Corp. v. Holliger, 986 S.W.2d 165 (Mo.1999). In Holliger, K-Mart relied on the Missouri long arm statute for its argument that Missouri did not have personal jurisdiction because the claim did not arise out of one of the activities enumerated in the long arm statute. The Holliger court rejected the argument that jurisdiction had to be based on the long arm statute, finding that to do otherwise would severely limit the reach of Missouri law and the protection that law gives Missouri residents and others authorized to use our state's courts. 986 S.W.2d at 168. The court further explained that long-arm statutes, as the name implies, are intended to expand the reach of the law of the state to authorize jurisdiction over foreign corporations that are not necessarily authorized to do business in the state but whose activities justify personal jurisdiction. 986 S.W.2d at 168. The Missouri Supreme Court concluded there is no need for a `long arm' to reach K-Mart outside of Missouri, because K-Mart has a registered agent in Missouri. 986 S.W.2d at 168. Applying this reasoning, the Scharff court concluded K.S.A. 17-7307(c) provided general jurisdiction and it, rather than the Kansas long arm statute, served as the basis for jurisdiction over the defendants. Scharff, -5. Similarly, in Scrivner v. Twin Americas Agricultural & Industrial Developers, Inc., 1 Kan.App.2d 404, 573 P.2d 614, rev. denied 222 Kan. 749 (1977), a case not cited by any of the parties, the Kansas Court of Appeals recognized general jurisdiction under K.S.A. 1976 Supp. 17-7301 (virtually same language as K.S.A.2005 Supp. 17-7301) and K.S.A. 17-7307(c). In that case, Kansas shareholders filed suit against a Panamanian corporation seeking primarily a supervised election of directors and to enjoin a proposed stock issue. The district court dismissed the suit for lack of personal jurisdiction over the defendant, and the Court of Appeals affirmed. In analyzing whether there was a basis for personal jurisdiction, the Scrivner court noted that the plaintiffs had disclaimed any reliance on the long arm statute, K.S.A. 60-308, and were not arguing that their cause of action arose out of the transaction of any business by the defendant in Kansas. 1 Kan. App.2d at 408, 573 P.2d 614. This left the plaintiffs with two possible avenues for establishing jurisdiction: K.S.A.1976 Supp. 17-7301 or K.S.A. 17-7307(c). Because the defendant had never applied for a certificate of authority to do business in Kansas, K.S.A. 1976 Supp. 17-7301 did not apply. The court then considered K.S.A. 17-7307(c), noting that under that statute the cause of action must have arisen either `out of such corporation doing business in Kansas,' or `while such corporation was doing business in Kansas.' 1 Kan.App.2d at 408, 573 P.2d 614. The first clause did not apply because the cause of action did not arise out of any business done by the defendant in Kansas; however, the second clause might apply if the defendant was doing business in Kansas when the cause of action arose. As stated in the syllabus, the court held: A foreign corporation may be sued in this state on a cause of action arising elsewhere if, at the time the cause of action arose, it was doing business in this state so as to be required to register and qualify. A foreign corporation may be sued here on any cause of action arising `while' it was doing business here, even if it was not qualified. 1 Kan.App.2d 404, Syl. ¶¶ 2, 3, 573 P.2d 614. In other words, the Scrivner court held general jurisdiction exists under K.S.A. 17-7307(c) where a foreign corporation is doing business in Kansas. Thus, the remaining question for the court to resolve was whether the plaintiffs' cause of action arose while the defendant was doing business in Kansas; the court concluded it was. 1 Kan.App.2d at 415, 573 P.2d 614. (The statute applied by the court was subsequently amended. See L.2004, ch. 143, sec. 80. Now, rather than defining doing business, the statute lists [a]ctivities of a foreign corporation which do not constitute doing business within the meaning of K.S.A. 17-7301 and provides that it does not apply in determining the contacts or activities that may subject a foreign corporation to service of process. . . . K.S.A.2005 Supp. 17-7303[a] and [c].). Beyond these cases, there are other authorities which support the plaintiff's argument. Notably, Judge Gard and Professor Casad, cited with approval in Kluin, 274 Kan. at 896, 56 P.3d 829, agree with plaintiff's position: It is important to note that the long-arm statute, K.S.A. 60-308, deals with service of process outside of Kansas. Section 308(d) expressly states that `nothing contained in this section limits or affects the right to serve any process in any other manner provided by law.' Thus, foreign insurers can be served under K.S.A. 40-218, which authorizes `general jurisdiction.' See Novak v. Mutual of Omaha Ins. Co., 29 Kan.App.2d 526, 28 P.3d 1033 (2001). Other foreign corporations that are `doing business' in Kansas can be served under K.S.A. 17-7301 (which requires consent to general jurisdiction) if the corporation is qualified to do business in Kansas, or under K.S.A. 17-7307(c), which authorizes general jurisdiction over a non-qualifying corporation for causes of action that arose while the corporation was `doing business' in Kansas, even though the cause of action arose elsewhere. See Scharff v. CRST Inc., 2002 WL 922131 (D.Kan.2002). 4 Gard & Casad, Kansas Law and Practice, Kan. C. Civ. Proc. Annot. § 60-308, pp. 423-24 (4th ed.2003). Professor Casad reiterated this view as part of the Kansas Judicial Council's testimony to a legislative committee considering 2006 House Bill (HB) 2610, legislation which makes our decision on this issue one of first and last impression. 2006 HB 2610 amended the long arm statute, effective upon its publication in the statute books, by among other things, adding the following emphasized language: Nothing contained in this section limits or affects the right to serve any process in other manner provided by law, including, but not limited to, K.S.A. 17-7301, 17-7307, 40-218 and 50-631, and amendments thereto.  The Judicial Council testimony, which was supported by a memorandum authored by Professor Casad, stated that Kansas had recognized general jurisdiction long before the Kansas long arm statute was enacted and the long arm statute was intended to extend the reach of Kansas courts, not to limit it. Judicial Council testimony on 2006 HB 2610, February 28, 2006; Minutes, Sen. Judiciary Comm. March 1, 2006 (attach.2). Additionally, the testimony stated: General jurisdiction over foreign corporations is clearly allowed pursuant to K.S.A. 17-7301. However, the testimony noted that confusion has developed over whether Kansas recognizes general jurisdiction and the amendments would clarify the law as it has long existed in this state. Contrary to this view, the defendants offer a severely strained interpretation of K.S.A. 17-7307(c), focusing upon the portion of the statute which states that, regardless of whether a foreign corporation has qualified to do business in Kansas, it may be sued for a cause of action which arose in Kansas out of such corporation doing business in Kansas, or arose while such corporation was doing business in Kansas. The defendants argue the first clause authorizes suits for causes of action arising out of a foreign corporation currently doing business in Kansas while the second clause authorizes suits for causes of action arising out of a foreign corporation formerly but no longer doing business in Kansas. The defendants' interpretation of the statute is contrary to the plain language of the statute which clearly authorizes general jurisdiction as argued by plaintiff. Furthermore, a different statute, K.S.A. 2005 Supp. 17-7306, sets out the procedure when claims are filed against a foreign corporation formerly but no longer doing business in Kansas. K.S.A.2005 Supp. 17-7306 provides that a foreign corporation authorized to do business in Kansas may surrender its authority and withdraw from the state by filing certain documents with the Secretary of State. Upon such filing, the appointment of the resident agent of the corporation in this state shall be revoked, and the corporation shall be deemed to have consented that service of process in any action, suit or proceeding based upon any cause of action arising in this state, during the time the corporation was authorized to transact business in this state, may thereafter be made by service upon the secretary of state in the manner prescribed by K.S.A. 60-304, and amendments thereto. K.S.A.2005 Supp. 17-7306(c). This statutory provision reinforces plaintiff's argument that K.S.A. 17-7307(c) authorizes general jurisdiction over foreign corporations still doing business in Kansas. We hold that K.S.A.17-7307(c) provides a basis for general jurisdiction over foreign corporations. ISSUE 2: Does the Exercise of Jurisdiction Over the Defendants Pursuant to K.S.A. 2005 Supp. 17-7301(b)(7) and K.S.A. 17-7307(c) Comport With Due Process? Having determined that K.S.A.2005 Supp. 17-7301(b)(7) and K.S.A. 17-7307(c) can provide the statutory basis for the exercise of general jurisdiction, we must determine whether the exercise of jurisdiction would offend due process.