Crystal Clear Optical, Inc. v. Silver

• Decision Date: 12 May 1995
• Docket Number: No. S-93-893,S-93-893
• Parties: CRYSTAL CLEAR OPTICAL, INC., Appellant, v. Lawrence M. SILVER, Appellee.
• Court: Nebraska Supreme Court

Page 535

531 N.W.2d 535

247 Neb. 981

CRYSTAL CLEAR OPTICAL, INC., Appellant, v. Lawrence M. SILVER, Appellee.

No. S-93-893.

Supreme Court of Nebraska.

May 12, 1995.

Syllabus by the Court

1. Judgments: Jurisdiction: Appeal and Error. When a jurisdictional question does not involve a factual dispute, determination of a jurisdictional issue is a matter of law which requires an appellate court to reach a conclusion independent from the trial court; however, when the determination rests on factual findings, a trial court's decision on the issue will be upheld unless the factual findings concerning jurisdiction are clearly incorrect.

2. Jurisdiction: Proof. The burden of proof rests upon the plaintiff confronted with a special appearance to demonstrate the court's personal jurisdiction over the defendant.

3. Due Process: Jurisdiction: States. Before a court can exercise personal jurisdiction over a nonresident defendant, the court must, first, determine whether the long-arm statute is satisfied, and, if the long-arm statute has been satisfied, second, whether minimum contacts exist between the defendant and the forum state for personal jurisdiction over the defendant without offending due process.

4. Constitutional Law: Jurisdiction. Neb.Rev.Stat. § 25-536(2) (Reissue 1989) expressly extends Nebraska's jurisdiction over nonresidents as far as the U.S. Constitution permits.

5. Jurisdiction: Principal and Agent. The "fiduciary shield doctrine" is not a bar to personal jurisdiction in Nebraska.

6. Jurisdiction: Principal and Agent: Corporations. When a corporate agent or employee is sued in Nebraska for acts committed in the course and scope of the defendant's employment in the corporation, the question of whether the Nebraska courts have personal jurisdiction over the corporation is irrelevant, unless the corporation is named as a party to the action.

7. Jurisdiction: Principal and Agent: Due Process. For the purpose of determining whether or not it has personal jurisdiction over a corporate agent, a Nebraska court should determine whether the agent personally had sufficient minimum contacts with Nebraska to satisfy federal due process requirements.

8. Judgments: Appeal and Error. Where the record demonstrates that the decision of the trial court is correct, although such correctness is based on a different ground from that assigned by the trial court, the appellate court will affirm.

Frederick S. Cassman, of Abrahams, Kaslow & Cassman, Omaha, for appellant.

Kermit A. Brashear and Donald J. Straka, of Brashear & Ginn, Omaha, for appellee.

WHITE, C.J., CAPORALE, FAHRNBRUCH, LANPHIER, WRIGHT, and CONNOLLY, JJ., and CORRIGAN, District Judge.

LANPHIER, Justice.

Crystal Clear Optical, Inc. (Crystal Clear), filed an action against Lawrence M. Silver, seeking a money judgment allegedly owed to Crystal Clear by National Consolidated Industries, Ltd. (NCI), a foreign corporation. Silver is alleged to have been the principal shareholder and officer of NCI and is alleged to have done acts which Crystal Clear claims should result in disregarding the corporate veil and holding Silver personally liable. The district court for Douglas County dismissed Crystal Clear's petition for lack of personal jurisdiction over Silver, on the ground that Crystal Clear failed to prove a prima facie case for piercing the corporate veil of NCI. We affirm the judgment of the district court on other grounds.

I. FACTUAL BACKGROUND

Crystal Clear is a Nebraska corporation engaged in the manufacture and processing of optical lenses. Crystal Clear's principal place of business is Omaha, Nebraska. The record indicates neither NCI's place of incorporation nor its principal place of business, but it is apparent from the record that neither is in Nebraska. The record reflects that from June 1990 through March 1993, NCI purchased thousands of items from Crystal Clear at a cost of over $250,000. Crystal Clear brought this action to recover $16,682.47 allegedly still owed to it by NCI.

Crystal Clear sued Silver rather than NCI because it claimed that NCI was Silver's alter ego. In its petition, Crystal Clear alleged that Silver was NCI's principal shareholder and officer. Crystal Clear also claimed that Silver formed and continued to operate NCI with inadequate capital and that Silver commingled and utilized NCI's assets and revenues for his own personal use. Crystal Clear alleged that, in order to hinder and defraud Crystal Clear from collecting amounts due from NCI, Silver diverted all of NCI's assets to himself when NCI became insolvent.

On June 14, 1993, Silver filed a special appearance to challenge the district court's jurisdiction. A hearing on the special appearance took place on August 2. Evidence was adduced in the forms of affidavits and exhibits. Crystal Clear offered the affidavit of its president, G. David Wormington, wherein Wormington restated the allegations in Crystal Clear's petition and claimed that he had personal knowledge of that information. Exhibit A attached to Wormington's affidavit states that Silver filed a security interest in all of NCI's accounts, inventory, equipment, general intangibles, contract rights, instruments, documents, chattel paper, and all proceeds, products, and accessions of and to that collateral. The filing instrument did not recite what consideration Silver had given to NCI in return for the security interest.

In addition to Wormington's affidavit and the security interest, Crystal Clear also offered into evidence numerous statements of NCI's account, detailing each purchase NCI made from Crystal Clear, as well as a monthly summary of NCI's account activity.

Silver's evidence at the special appearance hearing consisted of three affidavits: two from Silver and one from Patricia Tracy, NCI's chief operating officer and executive vice president from June 1990 to July 1992. In his affidavit, Silver stated that NCI incorporated in 1971, but denied that he was the incorporator. Silver stated that he became a minority shareholder in NCI on April 22, 1991. From June 1990 through July 1992, Silver reported that he served on NCI's board of directors, but not as an officer. During that same time period, Silver claimed that he was not involved in the day-to-day business of NCI and that he never had any contact with anyone from Crystal Clear. Silver stated that Tracy was responsible for transacting any and all business with Crystal Clear. Silver denied ever commingling NCI funds with his own or diverting NCI funds for his own personal use. Silver stated that NCI employed up to 40 people from June 1990 to July 1992.

Tracy testified that she oversaw all of NCI's business with Crystal Clear and that any such business was conducted via telephonic communication, overnight carriers, and U.S. mail. Tracy stated that an NCI employee, under Tracy's supervision, placed purchase orders with Crystal Clear. According to Tracy, NCI never had an office, bank account, telephone listing, sales representative, or real property in Nebraska. Furthermore, Tracy stated that no officers, directors, or employees from NCI ever entered Nebraska to conduct business with Crystal Clear.

The district court sustained NCI's special appearance on September 8, 1993, holding that Crystal Clear failed to allege sufficient facts in its petition to establish a cause of action to pierce the corporate veil of NCI and therefore failed to show that the district court had jurisdiction over Silver. The district court dismissed Crystal Clear's petition on September 29.

II. ASSIGNMENTS OF ERROR

Crystal Clear contends that the district court erred in (1) finding that Crystal Clear failed to establish a cause of action to pierce the corporate veil of NCI and (2) sustaining NCI's special appearance and dismissing Crystal Clear's petition.

III. STANDARD OF REVIEW

When a jurisdictional question does not involve a factual dispute, determination of a jurisdictional issue is a matter of law which requires an appellate court to reach a conclusion independent from the trial court; however, when the determination rests on factual findings, a trial court's decision on the issue will be upheld unless the factual findings concerning jurisdiction are clearly incorrect. State ex. rel. Grape v. Zach, 247 Neb. 29, 524 N.W.2d 788 (1994); Bradley v. Hopkins, 246 Neb. 646, 522 N.W.2d 394 (1994).

The burden of proof rests upon the plaintiff confronted with a special appearance to demonstrate the court's personal jurisdiction over the defendant. Wagner v. Unicord Corp., 247 Neb. 217, 526 N.W.2d 74 (1995); Williams v. Gould, Inc., 232 Neb. 862, 443 N.W.2d 577 (1989).

IV. ANALYSIS

1. NEBRASKA LONG-ARM STATUTE

Before a court can exercise personal jurisdiction over a nonresident defendant, the court must, first, determine whether the long-arm statute is satisfied, and, if the long-arm statute has been satisfied, second, whether minimum contacts exist between the defendant and the forum state for personal jurisdiction over the defendant without offending due process. Williams v. Gould, Inc., supra. Nebraska's long-arm statute, Neb.Rev.Stat. § 25-536 (Reissue 1989), provides:

A court may exercise personal jurisdiction over a person:

(1) Who acts directly or by an agent, as to a cause of action arising from the person:

(a) Transacting any business in this state;

(b) Contracting to supply services or things in this state;

(c) Causing tortious injury by an act or omission in this state;

(d) Causing tortious injury in this state by an act or omission outside this state if the person regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in this state;

(e) Having an interest in, using, or possessing real property in this state; or

(f) Contracting to insure any person, property, or risk located within this state at the time of contracting; or

(2)...