Opinion ID: 2089638
Heading Depth: 2
Heading Rank: 1

Heading: Personal Jurisdiction Over JAG in Ryan's Lien Action

Text: The question before the court is whether the district court has personal jurisdiction over JAG in Ryan's lien action. Ryan's principal theories of jurisdiction are (1) Minn. R. Civ. P. 4.03 and Minn.Stat. §§ 514.10-514.12 (2000) (Mechanics' Lien Statute) permit a joint-venture service rule and (2) actual notice of a lien action without service is sufficient to subject a party to personal jurisdiction under the Mechanics' Lien Statute. Because adopting these theories would require this court either to create new rules of service of process or depart from the plain meaning of statutory language, I concur with the majority's decision to reject these theories of personal jurisdiction. I disagree, however, with the disposition of this case and would remand the case to the district court for further factual findings. A remand is the proper disposition of this case because there is a material factual dispute regarding the relationship between JAG, JDC, and the Fairway Hills property. The majority insists that this relationship is not a factual question material to the resolution of this case. If the lower courts had considered and exhausted the universe of personal jurisdiction theories raised by the parties, the legal and factual relationship between JAG, JDC, and the Fairway Hills property indeed would be immaterial. However, this did not happen. The lower courts considered only the joint-venture theory of personal jurisdiction. Yet Ryan's complaint alleges that JAG and JDC are related business entities and share common ownership and control. Ryan thus raises two theories that could support a finding that the district court has personal jurisdiction over JAG. First, there could be a principal-agent relationship between the party served, JDC, and JAG such that service upon JDC was sufficient to provide personal jurisdiction over JAG. Derrick v. Drolson Co., 244 Minn. 144, 148-49, 69 N.W.2d 124, 127-28 (1955). Second, JAG and JDC may be engaged in a family partnership so that service upon JDC constituted service upon JAG. Minn.Stat. § 540.152 (2000); State v. Ritholz, 257 Minn. 201, 202-03, 100 N.W.2d 722, 724 (1960); Ford Motor Co. v. Sylte, 188 Minn. 578, 579-80, 248 N.W. 55, 56 (1933). The factual record before us indicates that JAG is wholly owned by Jim Jagodzinski. JDC is wholly owned by Joe Jagodzinski, Jim Jagodzinski's son. There is some indication that JAG and JDC operate out of the same business address at Fairway Hills in Chaska. It is unclear who owns the Fairway Hills property. Although JAG insists in its memorandum in support of its motion for summary judgment that it owns the Fairway Hills Development, neither JAG nor JDC submitted any title evidence to the district court. In addition, attached to the sworn affidavit of Joe Jagodzinski submitted in support of JDC's motion for summary judgment are two documents identifying JDC as the owner of the Fairway Hills property [1] as well as an affidavit of Tom Veenker, president of All Metro Development Consultants, in which Mr. Veenker states that the Fairway Hills Development in Chaska was developed by Jagodzinski Development Corporation and known [sic] by JAG Investments, Inc. Significantly, the contract documents signed by the parties and submitted to the district court by JDC contain an affirmative representation by JDC that it is the owner of the Fairway Hills property. Furthermore, Joe Jagodzinski testified in his deposition that there was a joint-venture and profit-sharing agreement between JAG and JDC and, in its answer, JAG claimed as an offset alleged damages claimed by JDC. These facts, particularly the profit sharing agreement between JAG and JDC relating to the Fairway Hills property, suggest that JAG and JDC were either engaged in business as a partnership or JDC was an agent of JAG. At a minimum, they indicate that Ryan's improvements to Fairway Hills through JDC were done with the knowledge and consent of JAG. It is therefore possible that service on JDC was sufficient to preserve Ryan's action against JAG. Of course, the fact that there are hints in the factual record before us that an agency or partnership theory might support a finding of personal jurisdiction over JAG does not mean that Ryan ultimately will prevail on this issue. The relevance and strength of these theories are a function of the business relationship between JAG, JDC, and the Fairway Hills property. This is why our prior case law emphasizes the importance of determining the connections between the parties and the property in a mechanics' lien foreclosure action. Smith v. Hurd, 50 Minn. 503, 506-07, 52 N.W. 922, 922 (1892). Satisfying the standards for service of process depends on the structure of business relationships. Id., 52 N.W. at 922. The existence of an agency relationship is a question of fact. Vacura v. Haar's Equipment, Inc., 364 N.W.2d 387, 391 (1985). The existence of a partnership is a question of fact. Cyrus v. Cyrus, 242 Minn. 180, 183, 64 N.W.2d 538, 541 (1954). We should remand this case for further factual findings regarding the true relationship between JAG, JDC, and the Fairway Hills property. The majority's summary disposition of this case selectively ignores our notice pleading standard. In dismissing this case, the majority is granting JAG summary judgment relief on one jurisdictional groundthe joint-venture theoryeven though the parties never advanced the joint-venture theory of jurisdiction to the district court. [2] Yet the majority ignores the agency and partnership theories of jurisdiction that were placed before the district court by Ryan's complaint. Since the days of code pleading are gone, Ryan properly raised the agency and partnership theories of personal jurisdiction by asserting in its complaint that JAG and JDC are related business entities and share common ownership and control. We should remand this case so the factual basis for evaluating these theories can be established. The purpose of the Mechanics' Lien Statute is to protect the rights of workmen and materialmen who furnish labor and material in the improvement of real estate. See, e.g., Armco Steel Corp. v. Chicago & N.W. Ry. Co., 276 Minn. 133, 137, 149 N.W.2d 23, 26 (1967). Joe Jagodzinski, JDC's owner, represented to Ryan and subcontractors, in writing, that it owned the Fairway Hills property. Now, after all the work has been done and the risks have been incurred, Jim Jagodzinski, JAG's owner and Joe Jagodzinski's father, argues that JAG is the true owner. A remand under these facts helps fulfill the longstanding promise of the Mechanics' Lien Statute that [h]e whose property is enhanced in value by the labor and toil of others should be made to respond in some way by payment and full satisfaction for what he has secured. Emery v. Hertig, 60 Minn. 54, 57, 61 N.W. 830, 831 (1895).