Beaudoin v. South Texas Blood & Tissue Center

• Decision Date: 24 June 2005
• Docket Number: No. 20040356.,20040356.
• Citation: 2005 ND 120,699 N.W.2d 421
• Parties: Michael BEAUDOIN, Plaintiff and Appellee v. SOUTH TEXAS BLOOD & TISSUE CENTER, Defendant and Appellant.
• Court: North Dakota Supreme Court

699 N.W.2d 421

2005 ND 120

Michael BEAUDOIN, Plaintiff and Appellee v. SOUTH TEXAS BLOOD & TISSUE CENTER, Defendant and Appellant.

No. 20040356.

Supreme Court of North Dakota.

June 24, 2005.

Kay Nord Hunt (argued) and Robert J. King, Jr. (on brief), Lommen Nelson Law Firm, Minneapolis, MN, and Orell D. Schmitz (appeared), Schmitz & Schmidt, Bismarck, ND, for plaintiff and appellee.

Michael T. Andrews (argued) and H. Patrick Weir (on brief), Vogel Law Firm, Bismarck, ND, for defendant and appellant. VANDE WALLE, Chief Justice.

[¶ 1] South Texas Blood & Tissue Center ("South Texas") appealed a memorandum opinion and order denying its motions to dismiss for lack of personal jurisdiction and to vacate a default judgment. We affirm the trial court's denial of the motion to dismiss for lack of personal jurisdiction, but we reverse the trial court's denial of the motion to vacate the default judgment and remand the case to the trial court.

[¶ 2] Michael Beaudoin had his right patella tendon surgically replaced in Dickinson, North Dakota, with a tendon removed from a cadaver in Texas. At the request of a Connecticut corporation, Allograft.com, South Texas shipped the tendon to Dickinson. Beaudoin sued South Texas, alleging the tendon was not sterile, and that, as a result, he contracted an infection in his right knee. South Texas initially failed to respond to the suit, and the district court issued a default judgment for Beaudoin. A dispute regarding service of process arose, and we resolved that matter in Beaudoin v. South Texas Blood & Tissue Center, 2004 ND 49, 676 N.W.2d 103. Specifically, we held the professional process server's delivery of the summons and complaint to South Texas's Executive Office Manager, who had been identified as one authorized to accept such documents and appeared to be of sufficient character and rank to make it reasonably certain that South Texas would be apprised of the service, constituted valid service of process under N.D.R.Civ.P. 4(d). Id. at ¶ 18. After remand, the district court denied South Texas's motion to dismiss the suit for lack of personal jurisdiction. The district court also denied South Texas's motion to vacate the default judgment and to allow South Texas to respond to Beaudoin's substantive allegations. The two questions raised in the present appeal are whether the district court has personal jurisdiction over South Texas and whether the district court erred in refusing to vacate the default judgment.

I.

[¶ 3] South Texas argues the district court does not have personal jurisdiction over it. South Texas asserts its constitutional, due-process rights would be violated by requiring it to defend against this suit in North Dakota. South Texas contends it does not have sufficient minimum contacts with the State and that, as a result, maintenance of this suit would be inconsistent with traditional notions of fair play and substantial justice.

A.

[¶ 4] South Texas highlights many facts militating against its amenability to suit in North Dakota. South Texas points out it has never maintained a place of business in North Dakota, it has never maintained offices in North Dakota, it has never stored inventory in North Dakota, it has never held bank accounts in North Dakota, it has never owned real estate in North Dakota, it has never kept personal property in North Dakota, it has never had employees in North Dakota, its employees do not travel to North Dakota, it has never acquired tissue within North Dakota, it has never processed tissue within North Dakota, it has never solicited business in North Dakota, it has never advertised in North Dakota, and it has never sent promotional materials to North Dakota.

[¶ 5] What South Texas does do, however, is to ship tissue components to places outside Texas. Prior to the shipment of Beaudoin's order of two patella tendons on July 3, 2000, South Texas shipped patella tendons to both St. Joseph's Hospital, the North Dakota hospital at which Beaudoin's surgery occurred, and the Minot Air Force Base in North Dakota. St. Joseph's Hospital placed orders on May 30, 2000, and June 19, 2000, and obtained five patella tendons. The Minot Air Force Base placed 19 orders from June 2, 1998, to June 12, 2000, and obtained 23 patella tendons. South Texas continued to ship patella tendons to both of these entities after Beaudoin's surgery.

[¶ 6] When South Texas sends components out of state, it does so with the assistance of third-party distributors. South Texas does not directly contract with, or sell blood and tissue components to, medical facilities, physicians, or patients. Rather, South Texas is contacted by distributors who field requests from medical facilities and physicians. The distributors proceed to act as intermediaries between the requesting party and South Texas. South Texas frequently ships its components directly to the end user for logistical and health reasons, and these shipments are received by representatives of the distributing intermediaries. When preparing an order for packing and shipping, South Texas generates a Tissue Order form that contains South Texas's contact information. South Texas further includes a Patient Usage Feedback Request form for tracking purposes, and this form also contains South Texas's contact information.

[¶ 7] South Texas is entirely independent of the Connecticut-based intermediary at issue in this matter, Allograft.com. South Texas does not control Allograft.com's distribution system. Further, South Texas was not aware the harvested tendon was to be sent to North Dakota until the day it received the shipment directive from Allograft.com. South Texas was not paid by St. Joseph's Hospital, but by Allograft.com. South Texas had no contractual relationship with St. Joseph's Hospital, any North Dakota physicians, or Beaudoin.

[¶ 8] South Texas believes its contacts with North Dakota were random and fortuitous and the result of the unilateral activity of Allograft.com and St. Joseph's Hospital.

B.

[¶ 9] In the recent case of Ensign v. Bank of Baker, 2004 ND 56, 676 N.W.2d 786, we discussed the requirements for personal jurisdiction:

Whether a court maintains personal jurisdiction over a party is a question of law, and we review the district court's decision on the matter by employing the de novo standard for legal conclusions and the clear-error standard for factual findings. Rodenburg [v. Fargo-Moorhead YMCA], 2001 ND 139, ¶ 17, 632 N.W.2d 407. Once a defendant has challenged a court's jurisdiction, the plaintiff bears the burden of proving that jurisdiction exists. Falkirk Mining Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 373 (8th Cir.1990); Red River Transp. and Dev. Co., Inc. v. Custom Airmotive, Inc., 497 F.Supp. 425, 427 (D.N.D.1980). The plaintiff must make a prima facie showing of jurisdiction to defeat a motion to dismiss for lack of personal jurisdiction, and if the court relies only on pleadings and affidavits, the court must look at the facts in the light most favorable to the plaintiff. Rodenburg, at ¶ 17. Questions of personal jurisdiction must be decided on a case-by-case basis, depending on the particular facts and circumstances. Catlin v. Catlin, 494 N.W.2d 581, 590 (N.D.1992).

....

"A court has personal jurisdiction over a person if the person has reasonable notice that an action has been brought and sufficient connection with the forum state to make it fair to require defense of the action in the state." [Larson v. Dunn, 474 N.W.2d 34, 38-39 (N.D.1991)]. In determining personal jurisdiction over a nonresident defendant, a court must first decide whether the forum state's long-arm provision confers jurisdiction over the nonresident defendant, and, if it does, the court must decide whether the exercise of personal jurisdiction over the nonresident comports with due process. Rodenburg v. Fargo-Moorhead YMCA, 2001 ND 139, ¶ 15, 632 N.W.2d 407. To satisfy due process concerns, the nonresident defendant must have sufficient minimum contacts with North Dakota so the exercise of personal jurisdiction does not offend traditional notions of fair play and substantial justice. Hansen v. Scott, 2002 ND 101, ¶ 16, 645 N.W.2d 223.

Id. at ¶¶ 11, 9.

[¶ 10] North Dakota's long-arm provision is N.D.R.Civ.P. 4(b), which provides:

(2) Personal Jurisdiction Based Upon Contacts. A court of this state may exercise personal jurisdiction over a person who acts directly or by an agent as to any claim for relief arising from the person's having such contact with this state that the exercise of personal jurisdiction over the person does not offend against traditional notions of justice or fair play or the due process of law, under one or more of the following circumstances:

(A) transacting any business in this state;

(B) contracting to supply or supplying service, goods, or other things in this state;

(C) committing a tort within or without this state causing injury to another person or property within this state;

(D) committing a tort within this state, causing injury to another person or property within or without this state;

....

(H) enjoying any other legal status or capacity within this state;

....

(3) Limitation on Jurisdiction Based Upon Contacts. If jurisdiction over a person is based solely upon paragraph (2) of this subdivision, only a claim for relief arising from bases enumerated therein may be asserted against that person.

North Dakota's long-arm provision is "designed to permit the state courts to exercise personal jurisdiction to the fullest extent permitted by due process." Hebron Brick Co. v. Robinson Brick & Tile Co., 234 N.W.2d 250, 255 (N.D.1975).

[¶ 11] As the Ensign Court continued:

We have identified five factors for assessing personal jurisdiction over a nonresident defendant: (1) the nature and quality of a nonresident defendant's contacts with the forum state; (2) the quantity of the nonresident defendant's contacts with the forum state; (3) the relation of the

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