Bowers v. Wurzburg

• Decision Date: 26 February 1998
• Docket Number: No. 24201.,24201.
• Citation: 202 W.Va. 43,501 S.E.2d 479
• Court: West Virginia Supreme Court
• Parties: Marvin T. BOWERS, Bessie C. Bowers, Esta M. Bell, John R. Bell, as Class Representatives for Other Unnamed Individuals, Plaintiffs Below, Appellants, v. Gretchen WURZBURG; Southland Corporation, a Corporation; Ito-Yokado Co., Ltd., a Corporation; IYG Holding Company, a Corporation; Seven-Eleven Japan Co., Ltd., a Corporation; Darrell V. McGraw, Jr., Attorney General of the State of West Virginia; John Doe # 1, Designer; John Doe # 2, Manufacturer of Pipe and Fittings; John Doe # 3, Installer of Pipe and Fittings; and John Doe # 4, Paver of Driveway, Defendants Below, Appellees.

501 S.E.2d 479

202 W.Va. 43

Marvin T. BOWERS, Bessie C. Bowers, Esta M. Bell, John R. Bell, as Class Representatives for Other Unnamed Individuals, Plaintiffs Below, Appellants, v. Gretchen WURZBURG; Southland Corporation, a Corporation; Ito-Yokado Co., Ltd., a Corporation; IYG Holding Company, a Corporation; Seven-Eleven Japan Co., Ltd., a Corporation; Darrell V. McGraw, Jr., Attorney General of the State of West Virginia; John Doe # 1, Designer; John Doe # 2, Manufacturer of Pipe and Fittings; John Doe # 3, Installer of Pipe and Fittings; and John Doe # 4, Paver of Driveway, Defendants Below, Appellees.

No. 24201.

Supreme Court of Appeals of West Virginia.

Submitted January 20, 1998.

Decided February 26, 1998.

Paul G. Taylor, Martinsburg, for Appellants.

Charles F. Printz, Jr., Bowles Rice McDavid Graff & Love, Martinsburg, Laurie Plessala Duperier, Arnold & Porter, Washington, DC, for Appellees Ito-Yokado Co., Ltd., Seven-Eleven Japan Co., Ltd., and IYG Holding Company. DAVIS, Chief Justice:

In this class action suit against foreign companies and their Texas subsidiary, the appellants, plaintiffs below, argue that the circuit court erred by failing to provide them sufficient time to conduct jurisdictional discovery before dismissing the foreign companies for lack of personal jurisdiction. Due to the complexity of the jurisdictional facts of this case, and the initial showing by the plaintiffs that there is the potential to establish personal jurisdiction over the foreign companies, we find the circuit court erred in failing to permit time for jurisdictional discovery. Consequently, we reverse the circuit court's order and remand the case.

I. FACTUAL AND PROCEDURAL HISTORY

On December 5, 1994, an explosion and fire occurred at the home of Marvin and Bessie Bowers, plaintiffs below and appellants. A subsequent investigation revealed that the explosion and fire resulted from gasoline that had seeped into the Bowerses' basement and was ignited by a sump pump. The gasoline had apparently migrated underground from a 7-Eleven convenience store situated several thousand feet from the Bowerses' home, in Shepherdstown, West Virginia. The gasoline had also seeped into the basements of other nearby homeowners, and large quantities of gasoline were found on the surface and in the subsurface of other residential property in the surrounding area. Unsafe conditions created by the presence of the gasoline required several individuals, who are also plaintiffs in this class action, to vacate their homes. The Bowerses, in particular, could not return to their home for five months following the fire. During the clean-up, remediation contractors engaged to remove the gasoline determined that approximately 10,000 gallons of gasoline had leaked from a broken pipeline between an underground gasoline storage tank and one of the gasoline pumps at the 7-Eleven convenience store.

Thereafter, this class action suit was filed, with the Bowerses named as class representatives,¹ against Gretchen Wurzburg, the owner of the land upon which the 7-Eleven Store was situated,² and The Southland Corporation [hereinafter "Southland"]. Southland is a Texas corporation with its principal office in Dallas, Texas. Southland has a certificate of authority authorizing it to do business in West Virginia,³ and is the owner and operator of the 7-Eleven store where the gasoline leak occurred.⁴ Also named as defendants in this class action suit were Ito-Yokado Co., Ltd. [hereinafter "Ito"], a Japanese corporation with its principal office located in Tokyo, Japan; Seven-Eleven Japan [hereinafter "SEJ"], a Japanese corporation that is a subsidiary of Ito; and IYG Holding Company [hereinafter "IYG"], a Delaware corporation that is also a subsidiary of Ito. Ito, SEJ and IYG [collectively referred to as "the Japanese companies" or "the Japanese defendants"] all held either a direct or indirect ownership interest in Southland at the time relevant to this suit.⁵

Shortly after receiving the summons and complaint, the Japanese defendants filed a motion to dismiss pursuant to Rules 12(b)(2) and 12(b)(5) of the West Virginia Rules of Civil Procedure alleging lack of personal jurisdiction and insufficiency of service of process.⁶ The motion was accompanied by two affidavits, one from an Ito executive, and another from a Southland executive.⁷ The Bowerses then filed their response and supporting memorandum opposing dismissal. In their response, the Bowerses requested, in part, that the circuit court delay final disposition of the defendants' motion to dismiss in order to permit them reasonable time to conduct discovery on the issue of personal jurisdiction. The circuit court did not grant the Bowerses' request. Following a subsequent hearing, the circuit court entered an order, on December 5, 1996, granting dismissal due to lack of personal jurisdiction. The circuit court found:

The Court lacks in personam jurisdiction over the Japanese defendants due to a lack of minimum contacts so as to comport with fair play and substantial justice. Additionally, the court finds that the Plaintiffs did not carry their burden regarding Southland as an alter ego of the Japanese defendants. Norfolk Southern Railway Co. v. Superior Court, 480 U.S. 102 (1987) [sic].⁸ The Court finds no need to reach the issue of service of process as it has no jurisdiction over defendants.

It is from the December 5, 1996, order of the Circuit Court of Jefferson County that the Bowerses appeal.

II. STANDARD OF REVIEW

Procedurally, this case is before this Court pursuant to the circuit court's order granting the defendant's motion to dismiss. Generally, "`[a]ppellate review of a circuit court's order granting a motion to dismiss a complaint is de novo.' Syl. pt. 2, State ex rel. McGraw v. Scott Runyan Pontiac-Buick, Inc., 194 W.Va. 770, 461 S.E.2d 516 (1995)." Syl. pt. 1, State ex rel. Smith v. Kermit Lumber & Pressure Treating Co., 200 W.Va. 221, 488 S.E.2d 901 (1997).

We are also asked to consider whether the circuit court should have provided the Bowerses the opportunity to engage in discovery, limited to the issue of jurisdiction, to obtain facts and information to support their allegations that Southland is the alter-ego of the Japanese companies. By showing that Southland is the alter-ego of the Japanese companies, the Bowerses can establish that the Japanese companies have sufficient minimum contacts with the State of West Virginia to warrant this State's assertion of personal jurisdiction.

It is well established that discovery is available for the limited purpose of developing jurisdictional facts when the trial court's jurisdiction has been challenged. See W.Va. R.Civ.P. 26(b)(1) (permitting, in general, "discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action, ... [and related] to the claim or defense of any other party" (emphasis added)); W.Va.R.Civ.P. 12(b) (identifying "lack of jurisdiction over the person" as a defense which may be raised by motion (emphasis added)); Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n. 13, 98 S.Ct. 2380, 2389 n. 13, 57 L.Ed.2d 253, 265 n. 13 (1978) (observing that "where issues arise as to jurisdiction or venue, discovery is available to ascertain the facts bearing on such issues"); Renner v. Lanard Toys Ltd., 33 F.3d 277, 283 (3d Cir.1994) (recognizing that "[n]umerous cases have sustained the right of plaintiffs to conduct discovery before the district court dismisses for lack of personal jurisdiction" (citations omitted)); Edmond v. United States Postal Serv. Gen. Counsel, 949 F.2d 415, 425 (D.C.Cir.1991) (stating "[a]s a general matter, discovery under the Federal Rules of Civil Procedure should be freely permitted, and this is no less true when discovery is directed to personal jurisdiction"); Filus v. Lot Polish Airlines, 907 F.2d 1328, 1332 (2d Cir.1990) (explaining that "generally a plaintiff may be allowed limited discovery with respect to the jurisdictional issue; but until she has shown a reasonable basis for assuming jurisdiction, she is not entitled to any other discovery"); Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir.1982) (noting that "[w]hen a defendant challenges personal jurisdiction, courts generally permit depositions confined to the issues raised in the motion to dismiss"); Hansen v. Neumueller GmbH, 163 F.R.D. 471, 473 (D.Del. 1995) (recognizing that "Fed.R.Civ.P. 26 permits liberal discovery of any facts which are relevant and not privileged" and further recognizing that "[t]his rule also applies where the plaintiff seeks discovery to establish personal jurisdiction"); United Mine Workers of Am. Int'l Union v. Arch Mineral Corp., 145 F.R.D. 3 (D.D.C.1992) (holding that plaintiff was entitled to limited discovery on the question of defendant's corporate structure where jurisdiction was claimed on alternate theories of single employer or alter-ego).⁹

While discovery is available to ascertain jurisdictional facts relative to a motion to dismiss for lack of personal jurisdiction, it is not mandatory. Whether to permit discovery¹⁰ to aid its decision of a motion to dismiss for lack of personal jurisdiction, or whether to decide such a motion based solely upon the pleadings, affidavits and other documentary evidence, is within the trial court's sound discretion. See 2 James Wm. Moore, Moore's Federal Practice § 12.31[7] (3d ed. 1997). The court's decision will not be overturned absent an abuse of discretion. Id. This standard was made clear in our recent decision in State ex rel. Bell Atlantic-West Virginia, Inc. v. Ranson, 201 W.Va. 402, 497 S.E.2d 755 (1997):

When a defendant files a motion to dismiss for lack of personal jurisdiction under W.Va.R.Civ.P. 12(b)(2), the circuit court may rule on the motion upon the pleadings, affidavits and other documentary evidence or the court may permit discovery to aid in its decision. At this stage, the party

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