444 U.S. 320 (1980), 78-952, Rush v. Savchuk

Docket Nº:No. 78-952
Citation:444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516
Party Name:Rush v. Savchuk
Case Date:January 21, 1980
Court:United States Supreme Court
 
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444 U.S. 320 (1980)

100 S.Ct. 571, 62 L.Ed.2d 516

Rush

v.

Savchuk

No. 78-952

United States Supreme Court

Jan. 21, 1980

Argued October 3, 1979

APPEAL FROM THE SUPREME COURT OF MINNESOTA

Syllabus

While a resident of Indiana, appellee was injured in an accident in Indiana while riding as a passenger in a car driven by appellant Rush, also an Indiana resident. After moving to Minnesota, appellee commenced this action against Rush in a Minnesota state court, alleging negligence and seeking damages. As Rush had no contacts with Minnesota that would support in personam jurisdiction, appellee attempted to obtain quasi in rem jurisdiction by garnishing the contractual obligation of State Farm Mutual Automobile Insurance Co. (State Farm) to defend and indemnify Rush in connection with such a suit. State Farm, which does business in Minnesota, had insured the car, owned by Rush's father, under a liability insurance policy issued in Indiana. Rush was personally served in Indiana, and after State Farm's response to the garnishment summons asserted that it owed the defendant nothing, appellee moved the trial court for permission to file a supplemental complaint making the garnishee, State Farm, a party to the action. Rush and State Farm moved to dismiss the complaint for lack of jurisdiction over the defendant. The trial court denied the motion to dismiss and granted the motion for leave to file the supplemental complaint. The Minnesota Supreme Court affirmed, ultimately holding that the assertion of quasi in rem jurisdiction under the Minnesota garnishment statute complied with the due process standards enunciated in Shaffer v. Heitner, 433 U.S. 186.

Held: A State may not constitutionally exercise quasi in rem jurisdiction over a defendant who has no forum contacts by attaching the contractual obligation of an insurer licensed to do business in the State to defend and indemnify him in connection with the suit. Pp. 327-333.

(a) A State may exercise jurisdiction over an absent defendant only if the defendant has certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310. In determining whether a particular exercise of state court jurisdiction is consistent with due process, the inquiry must focus on "the relationship among the defendant, the forum, and the litigation." Shaffer v. Heitner, supra at 204. P. 327.

(b) Here, the only affiliating circumstance offered to show a relationship among Rush, Minnesota, and this lawsuit is that Rush's insurance

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company does business in the State. However, the fictional presence in Minnesota of State Farm's policy obligation to defend and indemnify Rush -- derived from combining the legal fiction that assigns a situs to a debt, for garnishment purposes, wherever the debtor is found with the legal fiction that a corporation is "present," for jurisdictional purposes, wherever it does business -- cannot be deemed to give the State the power to determine Rush's liability for the out-of-state accident. The mere presence of property in a State does not establish a sufficient relationship between the owner of the property and the State to support the exercise of jurisdiction over an unrelated cause of action, and it cannot be said that the defendant engaged in any purposeful activity related to the forum that would make the exercise of jurisdiction fair, just, or reasonable merely because his insurer does business there. Nor does the policy provide significant contacts between the litigation and the forum, for the policy obligations pertain only to the conduct, not the substance, of the litigation. Pp. 327-330.

(c) Moreover, the requisite minimum contacts with the forum cannot be established under an alternative approach attributing [100 S.Ct. 574] the insurer's forum contacts to the defendant by treating the attachment procedure as the functional equivalent of a direct action against the insurer, and considering the insured a "nominal defendant" in order to obtain jurisdiction over the insurer. The State's ability to exert its power over the "nominal defendant" is analytically prerequisite to the insurer's entry into the case as a garnishee, and if the Constitution forbids the assertion of jurisdiction over the insured based on the policy, then there is no conceptual basis for bringing the "garnishee" into the action. Nor may the Minnesota court attribute State Farm's contacts to Rush by considering the "defending parties" together and aggregating their forum contacts in determining whether it has jurisdiction. The parties' relationships with each other may be significant in evaluating their ties to the forum, but the requirements of International Shoe must be met as to each defendant over whom a state court exercises jurisdiction. Pp. 330-332.

272 N.W.2d 888, reversed.

MARSHALL, J., delivered the opinion of the Court, in which BURGER, C.J., and STEWART, WHITE, BLACKMUN, POWELL, and REHNQUIST, JJ., joined. BRENNAN, J., ante p. 299, and STEVENS, J., post, p. 333, filed dissenting opinions.

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MARSHALL, J., lead opinion

MR. JUSTICE MARSHALL delivered the opinion of the Court.

This appeal presents the question whether a State may constitutionally exercise quasi in rem jurisdiction over a defendant who has no forum contacts by attaching the contractual obligation of an insurer licensed to do business in the State to defend and indemnify him in connection with the suit.

I

On January 13, 1972, two Indiana residents were involved in a single-car accident in Elkhart, Ind. Appellee Savchuk, who was a passenger in the car driven by appellant Rush, was injured. The car, owned by Rush's father, was insured by appellant State Farm Mutual Automobile Insurance Co. (State Farm) under a liability insurance policy issued in Indiana. Indiana's guest statute would have barred a claim by Savchuk. Ind.Code § 9-3-3-1 (1976).

Savchuk moved with his parents to Minnesota in June, 1973.1 On May 28, 1974, he commenced an action against Rush in the Minnesota state courts.2 As Rush had no contacts with Minnesota that would support in personam jurisdiction, Savchuk attempted to obtain quasi in rem jurisdiction by garnishing State Farm's obligation under the insurance policy to defend and indemnify Rush in connection with such a suit.3 [100 S.Ct. 575] State Farm does business in Minnesota.4 Rush was

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personally served in Indiana. The complaint alleged negligence and sought $125,000 in damages.5

As provided by the state garnishment statute, Savchuk moved the trial court for permission to file a supplemental complaint making the garnishee, State Farm, a party to the action after State Farm's response to the garnishment summons asserted that it owed the defendant nothing.6 Rush and State

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Farm moved to dismiss the complaint for lack of jurisdiction over the defendant.7 The trial court denied the motion to dismiss and granted the motion for leave to file the supplemental complaint.

On appeal, the Minnesota Supreme Court affirmed the trial court's decision. 311 Minn. 480, 245 N.W.2d 624 (1976) (Savchuk I). It held, first, that the obligation of an insurance company to defend and indemnify a nonresident insured under an automobile liability insurance policy is a garnishable res in Minnesota for the purpose of obtaining quasi in rem jurisdiction when the incident giving rise to the action occurs outside Minnesota but the plaintiff is a Minnesota resident when the suit is filed. Second, the court held that the assertion of jurisdiction over Rush was constitutional because he had notice of the suit and an opportunity to defend, his liability was limited to the amount of the policy, and the garnishment procedure may be used only by Minnesota residents. The court expressly recognized that Rush had engaged in no voluntary activity that would justify the exercise of in personam jurisdiction. The court found, however, that considerations of fairness supported the exercise of quasi in rem jurisdiction because in accident litigation the insurer controls the defense of the case, State Farm does business in and is regulated by the State, and the State has an interest in protecting its residents and providing them with a forum in which to litigate their claims.

Rush appealed to this Court. We vacated the judgment and remanded the cause for further consideration in light of

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Shaffer v. Heitner, 433 U.S. 186 (1977). 433 U.S. 902 (1977).

On remand, the Minnesota Supreme Court held that the assertion of quasi in rem jurisdiction through garnishment of an insurer's obligation to an insured complied with the due process standards enunciated in Shaffer. 272 N.W.2d 888 (1978) (Savchuk II). The court found that the garnishment statute differed from the Delaware stock sequestration procedure held unconstitutional in Shaffer because the garnished property was intimately related to the litigation and the garnishment procedure paralleled the asserted state interest in "facilitating recoveries for resident plaintiffs." 272 N.W.2d at 891.8 This appeal followed.

II

The Minnesota Supreme Court held that the Minnesota garnishment statute embodies the rule stated in Seider v. Roth, 17 N.Y.2d 111, 216 N.E.2d 312 (1966), that the contractual...

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