Court Opinion

ID: 9698471
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:51:38.695534+00
Date Added: 2024-06-11T18:20:41.224525
License: Public Domain

Connolly, L,
dissenting.
I disagree with the conclusion that Rupari had sufficient contacts with Nebraska to allow Nebraska courts to exercise personal jurisdiction. I would affirm the decision of the Nebraska Court of Appeals and remand the cause with directions to dismiss.
The evidence presented at the special appearance consisted of only two affidavits. Robert Mintz, the president of Rupari, located in Florida, averred that Rupari had never made sales in Nebraska, was not a Nebraska corporation, did not have offices in Nebraska, and its employees had never visited Nebraska in the scope of their employment. Larry Lubeck, the chief executive officer of Quality Pork, averred that Quality Pork had established an ongoing business relationship with Star, located in Texas. Star became delinquent on its account, and Quality Pork discontinued selling products to Star. Lubeck averred that Midwest, located in Colorado, had arranged an oral agreement between Quality Pork and Rupari whereby Rupari agreed to pay for pork products ordered by Star. The record at the special appearance is silent about how the contract was arranged or whether Rupari ever directly called Quality Pork to agree to the contract. The orders were delivered to Star in Texas, and Rupari was invoiced for them. Rupari made two payments and then failed to pay. Quality Pork spoke to a representative of Rupari on several occasions *490after the default. The affidavits do not state who initiated the communications. Thus, the record at the special appearance shows that Rupari’s only clear contact with Nebraska was writing two checks to Quality Pork and orally agreeing through a broker to pay for purchases made by another entity.
The burden of proof rests upon the plaintiff confronted with a special appearance to demonstrate the court’s personal jurisdiction over the defendant. Castle Rose v. Philadelphia Bar & Grill, 254 Neb. 299, 576 N.W.2d 192 (1998).
Before a court can exercise personal jurisdiction over a nonresident defendant, the court must first determine whether the long-arm statute is satisfied. If the long-arm statute is satisfied, the court must then determine whether minimum contacts exist between the defendant and the forum, allowing a court to exercise personal jurisdiction without offending due process. See, Crete Carrier Corp. v. Red Food Stores, 254 Neb. 323, 576 N.W.2d 760 (1998); Neb. Rev. Stat. § 25-536 (Reissue 1995). The long-arm statute expressly extends Nebraska’s jurisdiction over nonresidents to the extent permitted by the U.S. Constitution. Crete Carrier Corp., supra', Castle Rose, supra', § 25-536(2). Thus, I consider only whether Rupari had sufficient minimum contacts with Nebraska so that the exercise of personal jurisdiction would not offend constitutional principles of due process. See Crete Carrier Corp., supra.
The consideration of due process involves two steps. First, it must be determined whether the defendant has sufficient minimum contacts. Second, if such minimum contacts are established, the contacts may be considered in the light of other factors to determine whether the assertion of personal jurisdiction would comport with fair play and substantial justice. Internat. Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945); Crete Carrier Corp., supra. Such factors include the burden on the defendant, the interest of the forum state, the plaintiff’s interest in obtaining relief, the judicial system’s interest in obtaining the most efficient resolution of controversies, and the shared interest of the several states in furthering fundamental substantive social policies. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985); Crete Carrier Corp., supra.
*491The benchmark for determining if the exercise of personal jurisdiction satisfies due process is whether the defendant’s minimum contacts with the forum state are such that the defendant should reasonably anticipate being haled into court there. Crete Carrier Corp., supra; Castle Rose, supra. This analysis requires that we consider the quality and nature of the defendant’s activities to determine whether the defendant has the necessary minimum contacts with the forum to satisfy due process. Crete Carrier Corp., supra, citing Internat. Shoe Co., supra.
Due process does not require a defendant’s physical presence in the forum before jurisdiction is exercised. Quill Corp. v. North Dakota, 504 U.S. 298, 112 S. Ct. 1904, 119 L. Ed. 2d 91 (1992); Crete Carrier Corp., supra. However, the unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum state. Burger King Corp., supra; Crete Carrier Corp., supra; Castle Rose, supra. Rather, the claim must arise out of or relate to the defendant’s forum-related activities. Burger King Corp., supra. Additionally, it is essential in each case that there be some act by which the defendant purposely avails himself or herself of the privilege of conducting activities in the forum state, thus invoking the benefits and protections of its laws. Burger King Corp., supra; Crete Carrier Corp., supra; Castle Rose, supra. These requirements ensure that a defendant will not be subject to litigation in a jurisdiction solely because of random, fortuitous, or attenuated contacts. Id. Thus, action by Rupari, itself, must have created a “ ‘substantial connection’ ” with the forum. See Bell Paper Box, Inc. v. Trans Western Polymers, 53 F.3d 920, 922 (8th Cir. 1995), quoting McGee v. International Life Ins. Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957).
We have specifically stated that a contract with a party in Nebraska does not, in and of itself, provide the necessary contacts for personal jurisdiction. Castle Rose v. Philadelphia Bar & Grill, 254 Neb. 299, 576 N.W.2d 192 (1998). See, also, Burger King Corp., supra. When dealing with contracts, it is the prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing, that must be evaluated in determining whether a defendant purposely *492established minimum contacts within the forum. Crete Carrier Corp. v. Red Food Stores, 254 Neb. 323, 576 N.W.2d 760 (1998).
“ ‘Merely entering into a contract with a forum resident does not provide the requisite contacts between a [nonresident] defendant and the forum state.’ ” Bell Paper Box, Inc., 53 F.3d at 922. “This is particularly true when the nonresident defendant is a buyer, rather than a seller.” Id. See, also, Vetrotex Certainteed v. Consolidated Fiber Glass, 75 F.3d 147, 152 (3d Cir. 1996) (contacts of mere “ ‘passive buyer’ ” insufficient to satisfy due process).
When the defendant is a buyer, contacts with the forum are often too attenuated to satisfy the exercise of personal jurisdiction. Unlike situations involving sellers — who often directly solicit buyers in a fomm and perform a large portion of a contract in the forum through delivery — buyers often do little more than place an order; communicate via telephone, facsimile, or e-mail; and send payment for the product. Courts have held that such contacts are ancillary and are insufficient to satisfy due process. See, Vetrotex Certainteed, supra; Bell Paper Box, Inc., supra; Nicholas v. Buchanan, 806 F.2d 305 (1st Cir. 1986); Borg-Warner Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055 (11th Cir. 1986); Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d 1026 (5th Cir. 1983); Lakeside Bridge & Steel v. Mountain State Const., 597 F.2d 596 (7th Cir. 1979); TRWL Financial Estab. v. Select Intern., 527 N.W.2d 573 (Minn. App. 1995). See, generally, Bellboy Seafood v. Kent Trading Corp., 484 N.W.2d 796 (Minn. 1992); Quelle Quiche v. Roland Glass Foods, 926 S.W.2d 211 (Mo. App. 1996), overruled on other grounds, Chromalloy American v. Elyria Found., 955 S.W.2d 1 (Mo. 1997).
As one court has noted:
“The cases have distinguished . . . between the quality of contacts of buyers and sellers. The distinction is based primarily on the traditional scenario in which the seller is the aggressor in the interstate relationship; the seller solicits customers, advertises, or otherwise initiates the dealings. Where the buyer is the aggressor, however, its buyer status will not protect it.”
TRWL Financial Estab., 527 N.W.2d at 577. For the buyer to be the aggressor, it must be the dominant party in pursuing the transaction. See id.
*493Courts have further held that performance of contractual obligations by the seller cannot serve as a sufficient contact to confer jurisdiction over the out-of-state purchaser when the contract does not require the purchaser to perform in the forum state. Payment for goods in the forum state is generally not sufficient in and of itself to create the contacts necessary to assert personal jurisdiction. See, e.g., Borg-Warner Acceptance Corp., supra; Hydrokinetics, Inc., supra; Lakeside Bridge & Steel, supra. When negotiation for the contract took place over the telephone and delivery occurred outside the forum, courts have found insufficient contacts to satisfy due process. See, e.g., TRWL Financial Estab., supra; Nicholas, supra. In addition, contacts made after a failure to pay or rejection of goods are generally considered ancillary and cannot act to confer jurisdiction. See, e.g., Borg-Warner Acceptance Corp., supra.
In Bell Paper Box, Inc. v. Trans Western Polymers, 53 F.3d 920 (8th Cir. 1995), Bell Paper Box, Inc. (Bell), a South Dakota corporation that manufactures printed cartons, used a broker in California who solicited business from Trans Western Polymers, Inc. (Trans Western), a California corporation. Bell and Trans Western communicated by telephone, facsimile, and mail, with some communications routed through the broker. Trans Western sent Bell a purchase order and films that were necessary for Bell to manufacture cartons for Trans Western. The parties agreed that the contract would be construed in accordance with South Dakota law. Trans Western canceled the purchase order, and Bell filed suit in South Dakota.
The district court held that Trans Western lacked sufficient minimum contacts with South Dakota. The Eighth Circuit affirmed on appeal. The court noted that Trans Western did not itself have substantial contacts with the forum. Instead, Bell employed a broker in California who solicited the purchase order, and delivery of the product was to occur outside of South Dakota. Although films were sent, no raw materials were shipped into the forum, Trans Western had no physical presence in the forum, and Trans Western only communicated through interstate communications. The court did not find the choice-of-law clause persuasive. Thus, the court concluded that the use of interstate facilities such as telephone or mail was a “ ‘secondary *494or ancillary’ factor” that alone could not provide the necessary minimum contacts. Id. at 923.
In Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d 1026 (5th Cir. 1983), the plaintiff Hydrokinetics, Inc., was a manufacturer in Texas. The defendant Alaska Mechanical, Inc., an Alaska corporation, was contacted by Alaska Winter, a manufacturer’s representative, who initially brokered all communications between the parties. Using telex, telephone, and letter, the parties negotiated a contract for Alaska Mechanical to purchase products manufactured by Hydrokinetics. The contract stipulated that it would be governed by Alaska law. Two officers of Alaska Mechanical twice visited Hydrokinetics in Texas. The products were shipped to Washington and then to Alaska. Alaska Mechanical rejected the goods, and Hydrokinetics filed suit in Texas.
The district court concluded that Texas could not assert personal jurisdiction over Alaska Mechanical. On appeal, Hydrokinetics argued that Alaska Mechanical purposely availed itself of the benefits of Texas laws because (1) it agreed to purchase specific goods manufactured in Texas, (2) payment was to take place in Texas, (3) there were extensive communications between the parties, (4) an officer visited Hydrokinetics in Texas, and (5) the contract was accepted in Texas.
The Fifth Circuit affirmed. The court noted that although Alaska Mechanical agreed to purchase products manufactured in Texas, no performance of the contract by Alaska Mechanical was to take place in Texas with the exception of payment. The court stated that it did not weigh heavily the fact that checks might have been mailed to Texas. Instead, the court viewed the activity in Texas as unilateral activity by Hydrokinetics. The court also discounted the interstate communications between the parties. Although officers of Alaska Mechanical visited Hydrokinetics twice and accepted the contract there, the court concluded that the significance of the visits was diminished because the case involved a single transaction with a contract governed by Alaska law.
In comparison to Bell Paper Box, Inc. v. Trans Western Polymers, 53 F.3d 920 (8th Cir. 1995), and Hydrokinetics, Inc., supra, cases which have found sufficient contacts to assert personal jurisdiction over a buyer include more substantial contacts. *495For example, in Command-Aire v. Ontario Mechanical Sales & Service, 963 F.2d 90 (5th Cir. 1992), the case involved (1) a lengthy course of dealing between the parties, (2) the president of the defendant buyer corporation traveling to the forum for the purpose of specifically tailoring the manufacture of products to its needs, and (3) the buyer’s taking possession of the goods in the forum so that title passed there. Distinguishing the case from Hydrokinetics, Inc., supra, the court held that the contacts were no longer mostly unilateral on the part of the plaintiff and that the contacts were sufficient to confer jurisdiction.
Likewise, where the plaintiff seller had to retool machinery to custom make a product and entered into a contract contemplating a long-term and ongoing business relationship, contacts have been deemed sufficient to assert personal jurisdiction over an out-of-state buyer. Precision Lab. Plastics v. Micro Test, 96 Wash. App. 721, 981 P.2d 454 (1999).
Here, Quality Pork has failed to meet its burden of proof to show that Rupari had sufficient contacts with Nebraska to satisfy due process. Rupari’s only clear contacts with Nebraska were its agreement to pay for pork products to be sent to a third party in Texas, its act of mailing two checks to Nebraska, and two telephone communications with a representative of Quality Pork after the default.
The majority concludes that there were sufficient contacts because “Rupari induced Quality Pork to ship products to Star” when it agreed to pay for the products. The majority next concludes that Quality Pork’s claim arose out of Rupari’s contacts with a Nebraska company and that it would not be unduly burdensome for Rupari to defend an action in Nebraska. But the record is silent about who pursued the contract or who was the aggressor. All that is known is that an oral contract was arranged through a broker in Colorado and that Star placed orders for products for which Rupari was invoiced. An order for products and promise to pay is not the type of “inducement” that the case law envisions could create sufficient minimum contacts. See, e.g., Borg-Warner Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055 (11th Cir. 1986); Lakeside Bridge & Steel v. Mountain State Const., 597 F.2d 596 (7th Cir. 1979); TRWL Financial Estab. v. Select Intern., 527 N.W.2d 573 (Minn. App. 1995). If the view of *496the majority is followed, a mere purchaser, by simply agreeing to pay, would always be subject to suit in the seller’s state. Such a concept is unsupported by the case law. See id.
The record from the special appearance hearing shows that Rupari was nothing more than a mere purchaser, and even then, an attenuated purchaser, because the products were sent to a third party. The case law does not support the exercise of jurisdiction in such a situation. Indeed, in cases with clearer and substantially more contacts, courts have found that personal jurisdiction could not be satisfied without offending due process.
Further, Quality Pork has failed to show that the contract was formed, accepted, or required performance by Rupari in Nebraska other than sending payment. A broker in Colorado arranged the contract. The record is silent about where the actual contract formation took place, but the inference is that it was by telephone or other interstate communication. Outside of payment, Rupari had no contact with Nebraska to perform under the contract. The product was delivered to a company in Texas, and Rupari never traveled to Nebraska to complete or perform the contract. It is Rupari’s actions in the forum that must be considered. Quality Pork’s actions of performing the contract in the forum cannot confer jurisdiction over Rupari, who primarily acted outside the forum. See Bell Paper Box, Inc. v. Trans Western Polymers, 53 F.3d 920 (8th Cir. 1995). Two telephone calls were made after Rupari failed to pay. Those contacts were ancillary and cannot support the exercise of personal jurisdiction. See Borg-Warner Acceptance Corp., supra.
Finally, the majority’s conclusion that it would not be unduly burdensome for Rupari to defend the action in Nebraska is irrelevant. The burden on the defendant to defend the suit is not part of the minimum contacts analysis. Instead, if minimum contacts are shown, then the burden on the defendant is one of the factors considered to determine whether the exercise of jurisdiction comports with notions of fair play and substantial justice. Because there were not sufficient minimum contacts, the burden on Rupari to appear and defend the suit is irrelevant.
This is not a case where the seller met the burden of proof by showing that a buyer was the main aggressor in the transaction or one involving custom products that required additional work by *497the seller in the forum state. See Command-Aire v. Ontario Mechanical Sales & Service, 963 F.2d 90 (5th Cir. 1992). Nor did Quality Pork show that the parties contemplated a long-term relationship with numerous interstate communications. See Precision Lab. Plastics v. Micro Test, 96 Wash. App. 721, 981 P.2d 454 (1999). See, generally, Crete Carrier Corp. v. Red Food Stores, 254 Neb. 323, 576 N.W.2d 760 (1998).
Instead, Rupari’s contacts with Nebraska are attenuated and ancillary. Case law does not support the exercise of personal jurisdiction under the facts as presented at the special appearance. I find no support for the exercise of personal jurisdiction. Accordingly, I would affirm the decision of the Court of Appeals and remand the cause with directions to dismiss.