Berrigan v. Southeast Health Plan, Inc.

• Decision Date: 31 December 1987
• Docket Number: No. 87-1578-K.,87-1578-K.
• Citation: 676 F. Supp. 1062
• Parties: Michael J. BERRIGAN, Plaintiff, v. SOUTHEAST HEALTH PLAN, INC., an Alabama Corporation; and Southeast Health Plan of Louisiana, Inc., a Louisiana Corporation, Defendants.
• Court: U.S. District Court — District of Kansas

676 F. Supp. 1062

Michael J. BERRIGAN, Plaintiff, v. SOUTHEAST HEALTH PLAN, INC., an Alabama Corporation; and Southeast Health Plan of Louisiana, Inc., a Louisiana Corporation, Defendants.

No. 87-1578-K.

United States District Court, D. Kansas.

December 31, 1987.

Kaplan, McMillan & Harris, Wichita, Kan., for plaintiff.

Morris, Laing, Evans, Brock & Kennedy, Chartered, Wichita, Kan., for defendants.

MEMORANDUM AND ORDER

PATRICK F. KELLY, District Judge.

This matter is before the court on defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. The plaintiff, a Kansas resident, brought this action against the defendants for breach of an employment contract. Defendants argue that merely soliciting plaintiff in Kansas for employment, when they do no other business in Kansas, is insufficient to support jurisdiction either under the Kansas long arm statute or under the minimum contact requirements of the due process clause of the United States Constitution. For the reasons set forth herein, the court finds it has personal jurisdiction over defendants, and so the motion will be denied.

Michael Berrigan was hired by defendant Southeast Health Plan, Inc., an Alabama corporation, and Southeast Health Plan of Louisiana, Inc., a Louisiana corporation, as executive director of Southeast Health Plan of Louisiana, Inc., in early 1987. At the time he was hired, and at all times since, Mr. Berrigan was a resident of Andover, Kansas. (Berrigan Aff., ¶ 1.)

Mr. Berrigan was first contacted in connection with this job by Furst Group of Chicago, a screening firm acting as defendants' agent. Thereafter, plaintiff received numerous phone calls from George Salem, chief executive officer of Southeast Health Plan, Inc., in which Mr. Salem attempted to induce plaintiff to accept a position with defendant. (Berrigan Aff., ¶¶ 3-5.) Plaintiff was interviewed in Birmingham, Alabama, and in Baton Rouge, Louisiana. As a result of the interviews, plaintiff was offered the position of executive director. Plaintiff returned to Kansas with the employment contract, and after further telephone negotiations plaintiff executed the contract in Kansas and then returned it through the mail to defendant in Louisiana (¶ 17).

According to defendants' brief in support of their motion, the plaintiff, after being hired, "then moved to Baton Rouge, Louisiana to assume the position as executive director of Southeast Health Plan, Inc. Up to the time of his termination on May 1, 1987, Michael Berrigan worked in Baton Rouge, Louisiana and was paid in Baton Rouge, Louisiana by Southeast Health Plan of Louisiana, Inc. After his termination, Mr. Berrigan moved back to the Wichita, Kansas area and initiated immediate litigation." (Defs.' Brief at p. 3.) However, plaintiff has submitted an affidavit in which he states that he never moved from Kansas (¶ 1), although he maintained an apartment in Louisiana; that defendants were aware that he would not be able to relocate until May of 1988 (¶ 7); and that defendants understood that plaintiff would be performing part of his duties while in Kansas (¶¶ 8, 10, 11, 13 & 14). Defendants also agreed to pay plaintiff's travel expenses to and from Kansas (¶ 9).

In considering jurisdictional questions, a two-step analysis is applied. Cunningham v. Subaru of America, Inc., 631 F.Supp. 132, 134 (D.Kan.1986). First, it must be determined whether the defendants' conduct falls within the scope of service authorized by the forum state's long arm statute; and second, it must be determined whether defendants' contact with the forum state is sufficient to satisfy the "minimum contact" requirements of constitutional due process as set forth in Internat'l Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). When existence of jurisdiction is controverted, the burden of proof is on the plaintiff to demonstrate jurisdiction is present. The plaintiff, however, need only make out a prima facie case that the constitutional and statutory requirements for the assumption of personal jurisdiction are satisfied. Behagen v. Amateur Basketball Assn., 744 F.2d 731 (10th Cir.1984), cert. denied, 471 U.S. 1010, 105 S.Ct. 1879, 85 L.Ed.2d 171 (1985); Hoffman v. United Telecommunications, Inc., 575 F.Supp. 1463, 1469 (D.Kan.1983). The allegations in the pleadings and in any affidavits must be viewed in the light most favorable to plaintiff, and all factual doubts must be resolved in plaintiff's favor.

In this case, plaintiff asserts long arm jurisdiction pursuant to K.S.A. 60-308(b)(1) & (5). Although plaintiff's original complaint specifies only subsection (1), he is not required to plead personal jurisdiction. See Dirks v. Carnival Cruise Lines, 642 F.Supp. 971, 973 (D.Kan.1986).

The relevant sections of the Kansas long arm statute provide as follows:

Any person whether or not a citizen or resident of this state who in person or through an agent or instrumentality does any of the acts hereinafter enumerated, thereby submits the person and, if an individual, the individual's personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of these acts:

(1) Transaction of any business within this state;

....

(5) entering into an express or implied contract, by mail or otherwise, with a resident of this state to be performed in whole or in part by either party in this state;

The long arm statute reflects legislative intention to exert jurisdiction over nonresident defendants to the extent permitted by the due process clause of the Fourteenth Amendment. Misco-United Supply, Inc. v. Richards of Rockford, Inc., 215 Kan. 849, 851, 528 P.2d 1248 (1974).

In order for subsection (1) of the long arm statute to apply, plaintiff must show that (1) defendants purposefully did some act or consummated some transaction in Kansas; and (2) the claim for relief arises from, or is connected with, such act or transaction. White v. Goldthwaite, 204 Kan. 83, 88, 460 P.2d 578 (1969). The Kansas Supreme Court has stated that "in a broad sense, `business' is transacted within the state when an individual is within or enters this state ... and, through dealing with another within the state, effectuates or attempts to effectuate a purpose to improve his economic conditions, and satisfy his desires." Woodring v. Hall, 200 Kan. 597, Syl. ¶ 8, 438 P.2d 135 (1968).

Subsection (5) was enacted to broaden the effect of the long arm statute by permitting the exercise of personal jurisdiction over a nonresident defendant based solely on the making or performance of a single contract within this state. Under subsection (5), "regardless of the purpose of the contract, the requirements ... are satisfied if the contract is `to be performed in whole or in part by either party in this state.'" Carrothers Const. Co. v. Quality Service & Supply, 586 F.Supp. 134, 137 (D.Kan. 1984).

Although nothing in the employment contract at issue in the case at bar required plaintiff to partially perform in Kansas, it was understood by both parties that plaintiff would do part of his work at his Kansas residence. Arguably, then, the contract was "performed in part" in this state. As such, subsection (5) of the Kansas long arm statute is satisfied.

This court recently considered the application of subsection (5) in Green Country Crude, Inc. v. Avant Petroleum, Inc., 648 F.Supp. 1443, 1449 (D.Kan.1986). In that case, the contract at issue required that the seller, Green Country Crude, deliver a certain kind of oil to a pipeline facility in Oklahoma. Green Country was a Kansas corporation, but the contract had been negotiated entirely in Oklahoma and required performance (delivery of oil) in Oklahoma. Although the contract did not specify that Kansas oil be used, plaintiff filled the order with Kansas oil. When defendant Avant later breached the contract, Green Country brought suit in this court asserting jurisdiction over defendant pursuant to subsection (5). This court found that the contract was not "partially performed" in Kansas by virtue of plaintiff purchasing oil to fill the order in Kansas because "that activity by plaintiff was not anticipated or required by the contract itself. At best, under these facts plaintiff's purchases of Kansas oil were unilateral activities in preparation for performance of the contract which, significantly, occurred in Oklahoma." 648 F.Supp. at 1449. In contrast, Berrigan's activity in Kansas was anticipated when the contract was entered. Further, plaintiff's acts were performance of the contract itself and not mere unilateral acts in preparation for performance as in Green Country. Thus, Green Country is not dispositive of this case.

Even if the court were to conclude that under subsection (5) the parties' "understanding" about place of performance is irrelevant, and that only the language of the contract itself can be considered, this court could still assert jurisdiction under subsection (1) since defendants transacted business in Kansas when they solicited plaintiff for employment.

Defendants argue that no business was transacted in Kansas because defendants placed only two phone calls to plaintiff, one inviting him to interview and one inviting him to come to Alabama to negotiate the details of the contract. Generally, if a plaintiff is hired to work in another state, jurisdiction is denied if the defendant's only contacts with the forum are by phone or mail, and the active negotiation of the contract occurs in another state. See Casad, ¶ 8.112b; Cassell v. Loyola Univ., 294 F.Supp. 622 (E.D.Tenn.1968) (no jurisdiction in Tennessee, where Tennessee student recruited by nonprofit Louisiana university to play football in Louisiana, and no performance contemplated in Tennessee; contacts were by phone and mail; contract was signed by student in Tennessee).

However, according to plaintiff's affidavit, the telephone "negotiations" in this...