Insurance Co. of North America v. Marina Salina Cruz

• Decision Date: 23 February 1981
• Docket Number: No. 79-4050,79-4050
• Citation: 649 F.2d 1266
• Parties: INSURANCE COMPANY OF NORTH AMERICA, and Crystal Boat Company, a State of Washington, United States of America, partnership, Plaintiffs-Appellees, v. MARINA SALINA CRUZ, a naval shipyard owned and operated by the Republic of Mexico, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1266

649 F.2d 1266

INSURANCE COMPANY OF NORTH AMERICA, and Crystal Boat

Company, a State of Washington, United States of

America, partnership, Plaintiffs-Appellees,

v.

MARINA SALINA CRUZ, a naval shipyard owned and operated by

the Republic of Mexico, Defendant-Appellant.

No. 79-4050.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Sept. 11, 1980.

Decided Feb. 23, 1981.

Beverly May Carl, Dallas, Tex., argued for defendant-appellant; Gordon J. Tans, James M. Powell, Hughes, Thorsness, Gantz, Powell & Brundin, Anchorage, Alaska, on brief.

Julian Mason, Anchorage, Alaska, argued for plaintiffs-appellees; Dunn, Baily & Mason, Anchorage, Alaska, Mark S. Cole, Seattle, Wash., on brief.

Appeal from the United States District Court for the District of Alaska.

Before WALLACE, HUG and SCHROEDER, Circuit Judges.

WALLACE, Circuit Judge:

Marina Salina Cruz (the shipyard) secured permission to appeal, pursuant to 28 U.S.C. § 1292(b), from the district court's denial of a motion to dismiss. The shipyard contends: (1) that the district court lacks personal jurisdiction over the shipyard, (2) that sovereign immunity bars the action, and (3) that the action should be dismissed on the basis of forum non conveniens. We agree that there is no personal jurisdiction and reverse on that ground. We do not reach the sovereign immunity or forum non conveniens issues.

I

The Crystal Boat Company (CBC) is a Seattle partnership. The three partners are all residents of the State of Washington. CBC purchased the lobster fishing vessel Crystal S in Massachusetts in early 1974. CBC partner Oaksmith traveled to Salina Cruz, on the southern west coast of Mexico, on two occasions prior to the ship's arrival to arrange with the shipyard for modifications to make the vessel suitable for crab fishing. The shipyard is owned and operated by the Navy of the Republic of Mexico. The primary function of the shipyard is the maintenance of Mexican naval vessels. It does some work on private vessels.

The Crystal S was in the shipyard for about eight weeks. CBC partners Ness and Norness stayed at the shipyard during most of the period, and the vessel's captain was there during the entire period supervising the work. The cost of modifications and repairs was.$19,000. Although the issues were disputed, the district court found that at the time of the repairs the officials of the shipyard knew of the vessel's intended use in Alaska, and also found that the shipyard had made repairs on several other vessels that its officials knew would be used in Alaska.

Further work on the equipment of the Crystal S was done in Seattle over a period of several weeks, after which the Crystal S sailed for Alaska. On August 12, 1974 the Crystal S sank off Akutan Island, Alaska.

CBC and the Insurance Company of North America (insurance company), the insurer of the ship, brought an action in the United States District Court for the District of Alaska alleging that the shipyard had improperly performed certain modifications on the Crystal S which led to its sinking. The district court found that the vessel ceased running, turned over, and sank within Alaska's three mile limit. The value of the vessel at that time was approximately $1,000,000.

II

The district court found jurisdiction over the shipyard on the basis of the Alaska long arm statute, Alaska Stat. § 09.05.015(a). That statute has been construed by the Alaska Supreme Court to "establish jurisdiction to the maximum extent permitted by due process." Jonz v. Garrett/Airesearch Corp., 490 P.2d 1197, 1199 (Alaska 1971). We therefore need only consider whether asserting jurisdiction over the shipyard would violate the Due Process Clause of the Fourteenth Amendment. See Forsythe v. Overmyer, 576 F.2d 779, 782 (9th Cir.), cert. denied, 439 U.S. 864, 99 S.Ct. 188, 58 L.Ed.2d 174 (1978).

An assertion of in personam jurisdiction over a non-resident defendant does not violate due process if the defendant has "certain minimum contacts with (the forum state) 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, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (International Shoe), quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940). If the non-resident defendant's activities within a state are neither "substantial" nor "continuous and systematic," the existence of jurisdiction depends on the nature and quality of those of the defendant's contacts that are related to the cause of action. Data Disc, Inc. v. Systems Technology Assocs., 557 F.2d 1280, 1287 (9th Cir. 1977) (Data Disc); see International Shoe, supra, 326 U.S. at 319, 66 S.Ct. at 159. We use the following approach in evaluating these contacts:

(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws. (2) The claim must be one which arises out of or results from the defendant's forum-related activities. (3) Exercise of jurisdiction must be reasonable.

Data Disc, supra, 557 F.2d at 1287 (citations omitted).

We need not decide whether the first and second of the Data Disc conditions are met in this case because we conclude that the third condition is not met. It is not reasonable to require the shipyard to defend this suit in Alaska.

The reasonableness condition is an integral part of the International Shoe minimum contacts standard. Contacts satisfying the standard in the case of a corporation were described by the Supreme Court as

such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there. An "estimate of the inconveniences" which would result to the corporation from a trial away from its "home" or principal place of business is relevant in this connection.

International Shoe, supra, 326 U.S. at 317, 66 S.Ct. at 158. See also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980) (World-Wide Volkswagen); Kulko v. Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978).

There is no mechanical or quantitative test for jurisdiction under the International Shoe reasonableness standard, Kulko v. Superior Court, supra, 436 U.S. at 92, 98 S.Ct. at 1696, International Shoe, supra, 326 U.S. at 319, 66 S.Ct. at 159, and we shall not attempt to list all the factors that might, in a different case, be part of an assessment of the reasonableness of subjecting a defendant to jurisdiction. For purposes of the present case we conclude that the following seven factors are relevant: (A) the extent of the purposeful interjection into the forum state, see Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958); Data Disc, supra, 557 F.2d at 1288; (B) the burden on the defendant of defending in the forum, see World-Wide Volkswagen, supra, 444 U.S. at 292, 100 S.Ct. at 564; International Shoe, supra, 326 U.S. at 317, 66 S.Ct. at 158; (C) the extent of conflict with the sovereignty of defendant's state, see World-Wide Volkswagen, supra, 444 U.S. at 293-94, 100 S.Ct. at 565; (D) the forum state's interest in adjudicating the dispute, see World-Wide Volkswagen, supra, 444 U.S. at 292, 100 S.Ct. at 564; McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957); (E) the most efficient judicial resolution of the controversy, see World-Wide Volkswagen, supra, 444 U.S. at 292, 100 S.Ct. at 564; (F) the importance of the forum to plaintiff's interest in convenient and effective relief, see World-Wide Volkswagen, supra, 444 U.S. at 292, 100 S.Ct. at 564; Kulko v. Superior Court, supra, 436 U.S. at 92, 98 S.Ct. at 1696; and (G) the existence of an alternative forum.

III

A. Purposeful Interjection.

In assessing reasonableness in Data Disc, we asserted that it may be unreasonable to subject an out-of-state defendant to jurisdiction where the allegedly tortious act is committed outside of the forum state, having only an effect within the state, if the act is negligent rather than purposeful. The degree to which a defendant interjects himself into the state affects the fairness of subjecting him to jurisdiction.

Data Disc, supra, 557 F.2d at 1288.

Even if there is sufficient "interjection" into the state to satisfy the first Data Disc condition, the degree of interjection is a factor to be weighed in assessing the overall reasonableness of jurisdiction under the third Data Disc condition. We do not decide whether the negligent repairing of a ship with knowledge that it is to be used in a distant state is a sufficient act to count as availing the shipyard "of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws." Id. at 1287. If such repairs on the ship in question and a few other ships constitute the only contacts with the forum, however, the slightness of the purposeful interjection militates against the reasonableness of jurisdiction.

If there was a purposeful interjection of the shipyard into Alaska, it was of a minimal sort. The shipyard performed no services in Alaska. There was no solicitation of Alaskan business through salespersons or advertising. No telephone number is listed in Alaskan directories. Moreover, as suggested in Data Disc, negligent action at a distance causing injury within the forum, which is all that is alleged here, is less an interjection into the state than would be action intended to injure.

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