Addison Ins. Co. v. Knight & Knight, L.L.C.

• Decision Date: 29 June 2007
• Docket Number: No. 05-0306.,05-0306.
• Citation: 734 N.W.2d 473
• Parties: ADDISON INSURANCE COMPANY, Appellee, v. KNIGHT, HOPPE, KURNIK & KNIGHT, L.L.C., Appellant.
• Court: Iowa Supreme Court

734 N.W.2d 473

ADDISON INSURANCE COMPANY, Appellee, v. KNIGHT, HOPPE, KURNIK & KNIGHT, L.L.C., Appellant.

No. 05-0306.

Supreme Court of Iowa.

June 29, 2007.

James E. Shipman and Chad M. Von Kampen of Simmons, Perrine, Albright & Elwood, P.L.C., Cedar Rapids, and David M. Macksey and Victor J. Pioli of Johnson & Bell, Ltd., Chicago, IL, for appellant.

Patrick M. Roby and Robert M. Hogg of Elderkin & Pirnie, P.L.C., Cedar Rapids, for appellee.

STREIT, Justice.

An Illinois law firm regularly represented an Iowa insurance company's insureds in Illinois. After the law firm allegedly botched an appeal to the Illinois Appellate Court, the Iowa company filed a legal malpractice claim against the law firm in Linn County, Iowa. In a preanswer motion, the law firm alleged lack of personal jurisdiction improper venue, and forum non conveniens. The district court denied the motion and we granted the law firm's interlocutory appeal. We find the law firm had sufficient minimum contacts with the state of Iowa to warrant personal jurisdiction. The parties had a long-term business arrangement that caused the law firm to have substantial, ongoing communications with the insurance company in Iowa. We also find Linn County is proper for venue. The law firm failed to preserve for appeal the issue of forum non conveniens. We affirm the district court.

I. Facts and Prior Proceedings

Addison Insurance Company is an Illinois corporation with its principal place of business in Cedar Rapids, Iowa. It is a subsidiary of United Fire & Casualty and is part of the United Fire Group. Addison was originally located in Lombard, Illinois. However, since mid-1998, Addison's primary operations (including underwriting, marketing, claims handling, accounting, and support services) have been located in Cedar Rapids. Addison writes insurance in Iowa, Illinois, and several other states.

The law firm of Knight, Hoppe, Kurnik & Knight ("Knight") is an Illinois limited liability company. Knight's principal place of business is Des Plaines, Illinois.

In March 1993, Knight agreed to represent Addison's insureds in Illinois cases. When Addison informed Knight it was relocating its primary operations to Cedar Rapids in 1998, Knight expressed a strong interest in continuing their relationship. Knight and Addison regularly communicated via telephone, facsimile and mail regarding the cases Knight was handling for Addison. Additionally, Pat Fanning, a partner at Knight, visited Addison in Cedar Rapids shortly after the company's relocation.¹ Fanning conducted a seminar on recent changes to Illinois law and discussed current cases with management. From 1998 through 2003, Addison paid Knight $823,871 for its services.

In September 2000, Knight on behalf of Addison, filed an action seeking a declaratory judgment against Knoedler Manufacturing, Inc. in Cook County, Illinois. Addison claimed Knoedler had a duty to indemnify Addison pursuant to a 1993 purchase agreement between Knoedler and one of Addison's insureds. Addison sought $683,419 for its attorney fees, costs, and settlement paid in connection with a products liability claim. The district court granted Knoedler's motion to dismiss. After Addison's motion to reconsider was denied, Knight filed a notice of appeal on Addison's behalf. However, Knight failed to either file the record or brief the issues with the Illinois Appellate Court. In June 2002, the Illinois Appellate Court granted Knoedler's motion to dismiss for failure to timely file the record on appeal. John Pearson, a partner at Knight, traveled to Cedar Rapids to break the news to Addison.

Addison filed the present action against Knight and attorney James Meece for legal malpractice in Linn County, Iowa. Meece was the attorney at Knight assigned to the Knoedler action. Meece and Knight each filed a preanswer motion to dismiss for lack of personal jurisdiction, improper venue, and forum non conveniens. The district court found Knight's contacts with Iowa were sufficient to confer personal jurisdiction and that venue was proper in Linn County. It granted Meece's motion to dismiss for lack of personal jurisdiction. Knight filed an application for interlocutory appeal which this court granted.

II. Standard of Review

"[W]e accept as true the allegations of the petition and the contents of uncontroverted affidavits. The plaintiff has the burden to sustain the requisite jurisdiction, but when he [or she] establishes a prima facie case the defendant has the burden of producing evidence to rebut that showing. The trial court's findings of fact have the effect of a jury verdict and are subject to challenge only if not supported by substantial evidence in the record; we are not bound, however, by the trial court's application of legal principles or its conclusions of law."

Aquadrill, Inc. v. Envtl. Compliance Consulting Servs., Inc., 558 N.W.2d 391, 392 (Iowa 1997) (quoting Percival v. Bankers Trust Co., 450 N.W.2d 860, 861 (Iowa 1990)). Thus, we review the trial court's ruling dismissing Knight's motion to dismiss for errors at law. Iowa R.App. P. 6.4.

III. Merits

A. Personal Jurisdiction

Iowa Rule of Civil Procedure 1.306 "expands Iowa's jurisdictional reach to the widest due process parameters allowed by the United States Constitution." Hammond v. Fla. Asset Fin. Corp., 695 N.W.2d 1, 5 (Iowa 2005) (citing Hodges v. Hodges, 572 N.W.2d 549, 552 (Iowa 1997)). It provides in pertinent part:

Every corporation, individual, personal representative, partnership or association that shall have the necessary minimum contact with the state of Iowa shall be subject to the jurisdiction of the courts of this state, and the courts of this state shall hold such corporation, individual, personal representative, partnership or association amenable to suit in Iowa in every case not contrary to the provisions of the Constitution of the United States.

Iowa R. Civ. P. 1.306.

The Due Process Clause requires a nonresident to have "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.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, 102 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278, 283 (1940)). In applying the standard, we consider five factors:

1. the quantity of the contacts;

2. the nature and quality of the contacts;

3. the source and connection of the cause of action with those contacts;

4. the interest of the forum state; and

5. the convenience of the parties.

Larsen v. Scholl, 296 N.W.2d 785, 788 (Iowa 1980). Of these factors, the first three are the most important. Aquadrill, 558 N.W.2d at 393.

"The minimum contacts test is meant to insure the fairness and reasonableness of requiring a nonresident to defend a lawsuit in the forum state." Taylor v. Trans-Action Assoc., Inc., 509 N.W.2d 501, 504 (Iowa Ct.App.1993) (citing Int'l Shoe, 326 U.S. at 317, 66 S.Ct. at 158, 90 L.Ed. at 102). A defendant's conduct relative to the forum state must be such that the defendant should "`reasonably anticipate being haled into court there.'" Heslinga v. Bollman, 482 N.W.2d 921, 922 (Iowa 1992) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490, 501 (1980)). This requires "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hager v. Doubletree, 440 N.W.2d 603, 607 (Iowa 1989), cert. denied, 493 U.S. 934, 110 S.Ct. 325, 107 L.Ed.2d 315 (1989) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283, 1298 (1958)). In determining whether minimum contacts exist, we focus on "`the relationship among the defendant, the forum, and the litigation.'" Rush v. Savchuk, 444 U.S. 320, 327, 100 S.Ct. 571, 577, 62 L.Ed.2d 516, 524 (1980) (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2580, 53 L.Ed.2d 683, 698 (1977)).

There are two types of personal jurisdiction: specific jurisdiction and general jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404, 410-11 (1984). "`Specific jurisdiction refers to jurisdiction over causes of action arising from or related to a defendant's actions within the forum state, while general jurisdiction refers to the power of a state to adjudicate any cause of action involving a particular defendant, regardless of where the cause of action arose.'" Roquette Am., Inc. v. Gerber, 651 N.W.2d 896, 900 (Iowa Ct.App.2002) (quoting Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 819 (8th Cir.1994)). General jurisdiction requires the defendant's contacts with the forum state to be "continuous and systematic." Davenport Mach. & Foundry Co. v. Adolph Coors Co., 314 N.W.2d 432, 434 (Iowa 1982) (quoting Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 445, 72 S.Ct. 413, 418, 96 L.Ed. 485, 492 (1952)). Addison concedes Knight's contacts are not sufficient for general jurisdiction. Thus, we consider whether Knight's contacts satisfy the due process requirements for specific jurisdiction.

In support of its contention personal jurisdiction does not exist, Knight notes it does not maintain an office or own any property in the state of Iowa. None of its attorneys is licensed to practice law in Iowa and none resides in Iowa. Knight claims its contacts with Iowa are simply too attenuated to satisfy the Due Process Clause. Moreover, it claims the alleged malpractice did not "arise out of or relate" to these contacts.

Addison, on the other hand, argues the regular communication between the two parties concerning Knight's representation of Addison's insureds over many years is sufficient for personal jurisdiction. It contends the underlying action arose out of or relates to these contacts....