472 F.2d 723 (5th Cir. 1973), 72-1058, Benjamin v. Western Boat Bldg. Corp.

Docket Nº:72-1058.
Citation:472 F.2d 723
Party Name:Edward B. BENJAMIN, Plaintiff-Appellee, v. WESTERN BOAT BUILDING CORPORATION, Defendant-Third-Party Plaintiff-Appellant, v. Roger McALEER, Third-Party Defendant-Appellee.
Case Date:January 26, 1973
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 723

472 F.2d 723 (5th Cir. 1973)

Edward B. BENJAMIN, Plaintiff-Appellee,

v.

WESTERN BOAT BUILDING CORPORATION, Defendant-Third-Party Plaintiff-Appellant,

v.

Roger McALEER, Third-Party Defendant-Appellee.

No. 72-1058.

United States Court of Appeals, Fifth Circuit.

January 26, 1973.

Rehearing and Rehearing En Banc Denied March 15, 1973.

Page 724

Lawrence L. McNamara, Hendrik Uiterwyk, New Orleans, La., for plaintiff-appellant.

William A. Porteous, III, New Orleans, La., for Edward B. Benjamin.

Alan Y. Cole, Washington, D. C., Gerard H. Schreiber, New Orleans, La., for third-party defendant-appellee.

Before RIVES, AINSWORTH and RONEY, Circuit Judges.

RONEY, Circuit Judge:

In this Louisiana diversity case, we are asked to determine whether the District Court was correct in asserting in personam jurisdiction over the defendant, and in denying in personam jurisdiction over the third-party defendant, under the state "long-arm" statute. Because we hold that the in-state activity of neither defendant was sufficient to satisfy the "minimum contacts" requirement of constitutional due process, we reverse the assertion of in personam jurisdiction over the defendant and affirm

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the dismissal of the third party complaint.

Edward B. Benjamin, a resident of Louisiana, sued Western Boat Building Corporation, a Washington corporation, for an alleged breach of contract in the construction of Benjamin's 53 foot auxiliary yawl INDRA IV. After the District Court denied Western Boat's motion to dismiss for lack of in personam jurisdiction, Western Boat filed a third party complaint against the vessel's designer Robert W. McAleer, a naval architect in Alexandria, Virginia. The District Court dismissed the third party complaint for lack of in personam jurisdiction over McAleer. Western Boat appeals both rulings. It took an appeal as of right from the final judgment dismissing McAleer, and the District Court certified for interlocutory appeal the question of its jurisdiction over Western Boat. 28 U.S.C.A. § 1292(b).

Although the Louisiana "long-arm" statute, LSA-R.S. 13:3201, is pertinent because Rules 4(d)(7) and 4(e) of the Federal Rules of Civil Procedure permit service of process in accordance with the law of the state in which the District Court sits, we do not decide this case under the Louisiana law. Instead, we posit this decision on the failure of the exercise of in personam jurisdiction to meet the due process standard required by the United States Constitution. Our decision would appear to violate the usually sound practice of refusing to reach constitutional questions if a case can be decided on nonconstitutional grounds. See, e. g., Burton v. United States, 196 U.S. 283, 25 S.Ct. 243, 49 L.Ed. 482 (1905); Texas v. Grundstrom, 404 F.2d 644 (5th Cir. 1968). But we find our approach to be the better part of discretion here because it is unclear whether the Louisiana statute was intended to go to the permissible limits of due process in the exercise of in personam jurisdiction in contract cases, and we think that good federalism requires us to refrain from making law for Louisiana in this regard. 1 Moreover, the case can be disposed of readily on the constitutional ground, on the authority of existing decisions, without creating any new constitutional law.

CONSTITUTIONAL STANDARD

There is no objective test by which to judge the facts of a particular case to determine if the assertion of in personam jurisdiction exceeds the limits of constitutional due process. Although the jurisdictional theory of Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1878), required some personal presence within the territorial jurisdiction of a court to support a personal judgment, that theory was drastically changed by International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). International Shoe held that due process requires only that the defendant have sufficient contacts with the forum state to permit the suit to be maintained without offending traditional notions of fair play and substantial justice. Later Supreme Court cases have failed to develop any precise standard as to what those "minimum contacts" must be. See Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957).

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Analysis of our own cases reveals that, while very little purposeful activity within a state is necessary to satisfy the minimum contacts requirement, we have, nevertheless, unequivocally required some activity by the defendant before permitting the exercise of in personam jurisdiction under a state "long-arm" statute, the jurisdictional touchstone being the presence of sufficient in-state business activity to indicate a purposeful enjoyment of the benefits and protections of that state's law. For example, in Eyerly Aircraft Co. v. Killian, 414 F.2d 591 (5th Cir. 1969), this Court decided that due process requirements did not prevent a Federal District Court in Texas from exercising in personam jurisdiction, under the Texas "long-arm" statute, over the nonresident manufacturer of an allegedly defective amusement ride, called a Rock-O-Plane, the operation of which had caused a personal injury in Texas. The manufacturer, an Oregon corporation, had sold the ride to an itinerant amusement company almost twenty years before the Texas accident. The Eyerly Aircraft decision sustained in personam jurisdiction on two grounds: First, the defendant manufacturer Eyerly Aircraft had introduced the Rock-O-Plane into the stream of interstate commerce with reason to know or to expect that the ride would eventually be brought to Texas. Second, Eyerly Aircraft had direct contacts with Texas in the form of substantial and continuing business relations with Texas firms. Among these contacts were (1) sales and deliveries of amusement devices and parts directly into the state; (2) the extension of credit in the state; (3) the retention of liens on items sold; (4) the filing of such liens with state and county authorities; (5) the servicing of machines in the state; and (6) the solicitation of business in the state. The Eyerly Aircraft Court characterized these contacts as "neither occasional nor sporadic," but rather as "continuous and substantial." 414 F.2d at 594-595.

Subsequent to Eyerly Aircraft, this Court approved "long-arm" jurisdiction resting upon a "stream of commerce" theory. In Coulter v. Sears, Roebuck & Co., 426 F.2d 1315 (5th Cir. 1970), the Texas plaintiffs had purchased a television set from Sears in Lubbock, Texas. After it allegedly...

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