Davis v. Otten

Citation2022 S.D. 39
Decision Date13 July 2022
Docket Number29691-r-JMK
PartiesCATHERINE DAVIS, Plaintiff and Appellee, v. RICHARD OTTEN, Defendant and MEEMIC INSURANCE COMPANY, Defendant and Appellant
CourtSupreme Court of South Dakota

ARGUED APRIL 27, 2022.

APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT LAWRENCE COUNTY, SOUTH DAKOTA, THE HONORABLE MICHELLE K COMER Judge.

EARL G. GREENE, III SUSAN B. MEYER of Gordon &Rees, LLP Rapid City, South Dakota Attorneys for defendant and appellant.

DEAN FAUST of Moore-Faust Law Group Rapid City, South Dakota Attorneys for plaintiff and appellee.

KERN Justice.

[¶1.] Meemic Insurance Company (Meemic) appeals from the circuit court's order denying its motion to dismiss for lack of personal jurisdiction. Meemic contends that it lacked the necessary minimum contacts with South Dakota to enable the court to exercise personal jurisdiction under South Dakota's long arm statute, SDCL 15-7-2, or under the principles of federal due process. We reverse.

Facts and Procedural History

[¶2.] On July 28, 2019, at approximately 6:18 p.m., Catherine Davis was riding as a passenger on William Laeder's 2009 Harley Davidson motorcycle. Davis and Laeder, both residents of Michigan, were traveling eastbound on U.S. Highway 14A near Sturgis in Lawrence County. At the same time, Richard Otten a resident of Sturgis, was traveling westbound on U.S Highway 14A on his 2012 Harley Davison motorcycle. Otten was driving at an excessive speed, which other motorcycle riders who witnessed the accident estimated to be around 55 miles per hour on a curve with a suggested maximum speed of 35 miles per hour. Otten failed to negotiate a turn and crossed into the oncoming traffic lane, colliding head on with Davis and Laeder. Davis, Laeder, and Otten sustained incapacitating injuries. Laeder and Otten were transported to Sturgis Regional Hospital while Davis was transported to Rapid City Regional Hospital. Davis suffered serious life altering injuries resulting in alleged medical expenses and damages exceeding $330,000. Davis alleges she has been unable to work following the accident.

[¶3.] Prior to the accident, Meemic, a property and casualty insurance company organized under the laws of Michigan, had issued an insurance policy to Davis.[1] The policy was issued in Michigan and provided Davis coverage for uninsured and underinsured motorist claims, subject to the policy's terms and conditions. Meemic's policies are offered in compliance with Michigan law with respect to personal injury protection, property protection, residual liability coverage, and uninsured/underinsured coverage. Meemic is not authorized to write insurance policies in South Dakota. The policy was in effect at the time of the accident.

[¶4.] Otten was insured through a State Farm policy with liability limits of $25,000. State Farm offered the full amount of the $25,000 policy limits as settlement to Davis on September 20, 2019. On October 9, 2019, Davis sent a letter to Meemic discussing the $25,000 settlement offer provided by State Farm and identifying medical costs for Davis in excess of $231,000 and the need for continued treatment. The letter made claim under any and all coverages available under Davis's insurance policy, including underinsured coverage. On July 24, 2020, Meemic issued a letter denying coverage, noting that the terms and conditions of Davis's policy do not provide coverage for accidents involving motorcycles.

[¶5.] On November 23, 2020, a Meemic representative contacted counsel for Davis via email and voicemail offering to settle the claim for $75,000. Counsel did not respond. Meemic repeated the offer by voicemail again on December 2, 2020, to which counsel again did not respond. Meemic called a third time on January 20, 2021, this time speaking with a receptionist at Davis's attorney's firm and requesting a return call.

[¶6.] On March 4, 2021, Davis filed a complaint against Otten and Meemic. Davis alleged that Meemic breached its insurance contract with Davis by neglecting, refusing, or failing to compensate Davis under the underinsured motorist coverage and no-fault insurance terms of her policy.

[¶7.] On April 9, 2021, Meemic filed a motion to dismiss for want of personal jurisdiction pursuant to SDCL 15-6-12(b)(2) and failure to state a claim upon which relief can be granted pursuant to SDCL 15-6-12(b)(5). In its brief in support of the motion to dismiss, Meemic claimed it was not subject to jurisdiction under South Dakota's long arm statute because it did not engage in any acts enumerated in the statute that would subject it to jurisdiction. Meemic further claimed that even if South Dakota's long arm statute applied, under a due process analysis, Meemic did not have sufficient minimum contacts with the state to support a finding that Meemic purposefully availed itself of the privilege of conducting activities within the state, thereby invoking the benefits and protections of South Dakota's laws.

[¶8.] A hearing was held on Meemic's motion to dismiss for lack of personal jurisdiction on May 18, 2021. During the hearing, Davis's attorney first asserted that the motion to dismiss need not be decided because "the underinsured motorist claim" had been settled, noting that on May 5, 2021, he sent a letter on his client's behalf to Meemic accepting Meemic's November 3, 2020 settlement offer of $75,000. In response, Meemic contended that no settlement occurred because Davis's initiation of the lawsuit operated either as a rejection of or counteroffer to its previous settlement offer. At the conclusion of the hearing, the court denied Meemic's motion to dismiss. It did not address the question whether the claim had been settled. After the circuit court entered its order denying the motion to dismiss, Meemic filed a petition for intermediate appeal, which we granted on August 6, 2021.

Standard of Review

[¶9.] "A motion to dismiss under SDCL 15-6-12(b)(2) 'is a challenge to the court's jurisdiction over the person and is a question of law that we review de novo.'" Zhi Gang Zhang v. Rasmus, 2019 S.D. 46, ¶ 17, 932 N.W.2d 153, 159 (quoting Kustom Cycles, Inc. v. Bowyer, 2014 S.D. 87, ¶ 8, 857 N.W.2d 402, 405). "We review a [circuit] court's determination regarding personal jurisdiction based on written submissions in the light most favorable to the nonmoving party." Marschke v. Wratislaw, 2007 S.D. 125, ¶ 9, 743 N.W.2d 402, 405 (citation omitted).

Analysis and Decision

[¶10.] Meemic contends that it did not engage in any of the acts enumerated in SDCL 15-7-2, South Dakota's long arm statute, in order to support the circuit court's exercise of personal jurisdiction. Meemic argues that none of the underlying facts support personal jurisdiction under the long arm statute and that its only involvement in the litigation in South Dakota was filing a motion to dismiss.

Further Meemic asserts that the subject matter of Davis's claim against Meemic springs from a contract, not a tort, and involves an issue between two Michigan residents, falling within the purview of Michigan law. Turning to a due process analysis, Meemic points to International Shoe Co. v. Washington to support its view that even if South Dakota's long arm statute applies, the necessary "traditional notions of fair play and substantial justice" prong for constitutional personal jurisdiction cannot be met. 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (cleaned up). Meemic asserts that as the defendant, it did not engage in continuous contacts with South Dakota sufficient to purposefully avail itself to the privilege of conducting activities within the state.

[¶11.] Davis responds, first, regarding South Dakota's long arm statute, that while Meemic may not sell insurance policies in South Dakota, it is aware that policyholders will travel in all states and at times be involved in collisions in states other than where Meemic sells policies. Next, Davis argues that personal jurisdiction is proper under the long arm statute because her claims arose from the commission of a tort in South Dakota, making South Dakota the best forum for determining damages. Additionally, Davis asserts that the risk of an insured being involved in a collision with an underinsured motorist while in South Dakota was foreseeable to Meemic at the time of contracting, bringing Meemic within the court's jurisdiction. Davis also contends that the requirements of federal due process are met in this case, specifically asserting that Meemic purposefully availed itself of the privilege of acting in South Dakota and to the benefits and protections of its laws by selling insurance policies effective in all states, including South Dakota.

Furthermore, Davis claims that Meemic satisfies the requirement of having directed activities at South Dakota by selling policies that cover insureds that may drive within the state.[2]

[¶12.] For South Dakota to exercise personal jurisdiction over a non-resident party, two conditions must be satisfied. Kustom Cycles, Inc., 2014 S.D. 87, ¶ 9, 857 N.W.2d at 406. First, the court must determine that "the legislature granted the court jurisdiction pursuant to South Dakota's [l]ong [a]rm [s]tatute, SDCL 15-7-2." Id. (citation omitted). The court must then determine that the exercise of jurisdiction "comport[s] with federal due process requirements." Id. (citation omitted). "[T]he party seeking to establish the court's personal jurisdiction over the defendant . has the burden of showing a prima facie case of jurisdiction[.]" Id. ¶ 8, 857 N.W.2d at 405.[3] [¶13.] South Dakota's long arm statute, SDCL 15-7-2, is to be construed broadly when evaluating jurisdiction. Rothluebbers v. Obee, 2003 S.D. 95, ¶ 24, 668 N.W.2d 313, 322 (citation omitted). Davis argues that...

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