Dent-Air, Inc. v. Beech Mountain Air Service
| Decision Date | 22 April 1983 |
| Docket Number | No. C1-82-738.,C1-82-738. |
| Citation | 332 NW 2d 904 |
| Parties | DENT-AIR, INC. and Raynard P. Nyberg, Respondents, The Midway National Bank of St. Paul, Respondent, v. BEECH MOUNTAIN AIR SERVICE, INC. and Eugene G. Bradshaw, Appellants. |
| Court | Minnesota Supreme Court |
Nichols, Kruger, Starks & Carruthers and Daniel J. Starks, Minneapolis, for appellants.
Murnane, Conlin, White, Brandt & Hoffman and Lawrence R. King, St. Paul, for The Midway Nat. Bank of St. Paul.
Marshall G. Anderson, Minneapolis, for Dent-Air, Inc. and Raynard P. Nyberg.
Considered and decided by the court en banc without oral argument.
This is an appeal from the denial of appellant's motion to dismiss for failure to join indispensable parties under Minn.R. Civ.P. 19.02 and for lack of personal jurisdiction. Because we conclude that Minnesota cannot constitutionally assert personal jurisdiction over appellants, we do not reach the Rule 19 issue.
Respondents filed a three-count complaint in Hennepin County District Court for breach of separate lease agreements for three aircraft. Respondents are a Minnesota resident, Raynard P. Nyberg, Dent-Air, Inc., Nyberg's solely held corporation, and the Midway National Bank of St. Paul (Midway), the assignee of Nyberg's and Dent-Air's interests in the leases. Appellants are Eugene G. Bradshaw, a North Carolina resident, and his solely held corporation, Beech Mountain Air Service, Inc. (BMAS), the lessee under all three leases.
Nyberg formed the Dent-Air corporation to lease aircraft after he purchased a Cessna 404 Titan Ambassador, Serial No. N3942C ("Charlie"). He advertised the plane for lease in the national Trade-A-Plane magazine and began negotiations with a Florida company. When those negotiations fell through, someone responding to the ad suggested that he contact Eugene Bradshaw. Nyberg called Bradshaw, then traveled to North Carolina to negotiate a lease. The 2-year lease was executed on June 5, 1979 between Dent-Air and BMAS. It was made subject to Nyberg's "getting the bank financing for said airplane." The lease provided for acceptance of the Charlie at Minneapolis, but the plane was actually delivered to BMAS at Knoxville, Tennessee on June 8, 1979. On that day, Bradshaw signed a personal guarantee for the lease. He later sent numerous financial documents to Minnesota in order to help Nyberg obtain financing from Midway.
The Charlie was subleased by BMAS to Richard Wellons of Knoxville. Wellons then subleased the Charlie to Julio Martinez of Florida. The Charlie was stolen while subleased and has not yet been recovered.
Nyberg acquired a second Cessna, Serial No. N6247Q ("Quebec"), which he leased personally to BMAS on August 11, 1979. The parties disagree as to whether negotiations for this lease were initiated by Nyberg or by Bradshaw. The Quebec lease was not made subject to bank financing. Bradshaw personally guaranteed the Quebec lease. The lease provided for acceptance of the Quebec at Rockford, Illinois, but the plane was delivered to BMAS in Tennessee.
The Quebec was also subleased to Wellons. The plane was damaged during landing while being piloted by an employee of Wellons. It was repaired in Tennessee, and Nyberg retook possession in Tennessee.
A third Cessna, Serial No. N8818G ("Gulf") was leased by Nyberg personally to BMAS on September 17, 1979. Again, the parties disagree as to who initiated the negotiations. It was leased under the same terms as the Quebec, and Bradshaw personally guaranteed the lease. The plane was financed by Midway. It was accepted in Atlanta, Georgia.
The Gulf was subleased by BMAS to Midway Aero Films, a Florida company. Nyberg executed a second lease on the Gulf on June 9, 1980. The lessee was FunTimes, Inc., a Florida corporation; Bradshaw signed FunTimes' lease as its agent and personally guaranteed the lease. It does not appear that FunTimes ever took possession of the Gulf. Instead, it was in the possession of Midway Aero Films when it was detained in Columbia, South America, by Columbian authorities. Efforts to recover the aircraft were unsuccessful.
In all three leases the lessee was to obtain and pay for insurance on the aircraft. Each lease contained a provision stating that the lease would be governed by Minnesota law. Also, in each lease a provision prohibiting subleasing was crossed out and initialed. All leases required redelivery of the aircraft to Minnesota, but none was redelivered. Rent was payable in Minnesota.
Both BMAS and Bradshaw, individually, contend on appeal that they do not have sufficient "minimum contacts" with Minnesota so as to permit a constitutional exercise of personal jurisdiction under Minnesota's long-arm statute, Minn.Stat. § 543.19 (1982).
Before a court can constitutionally exercise jurisdiction over a nonresident defendant, the plaintiff must make a prima facie showing1 that defendants have sufficient contacts with a state so that requiring them to defend in the state does not violate traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). It is "essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). Finally, in contract cases, the contract must have a substantial connection with the state. See McGee v. International Life Insurance Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957). The nonresident must be able to reasonably anticipate being haled into the state's court. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).
In making this constitutional determination, we have adopted the five-factor test set out in Aftanase v. Economy Baler Co., 343 F.2d 187, 197 (8th Cir.1965). Vikse v. Flaby, 316 N.W.2d 276, 282 (Minn.1982). An analysis of minimum contacts requires consideration of (1) the quantity of contacts, (2) the nature and quality of contacts, (3) the source and connection of those contacts to the cause of action, (4) the interest of the forum state, and (5) the convenience of the parties. The first three factors are the primary factors, with the last two deserving lesser consideration.
The alleged contacts2 stretched over a period from June until September of 1979, during which time all three leases were negotiated and executed. During that time, financial papers were sent to Minnesota by Bradshaw. While the quantity of contacts cannot be termed systematic, this is not a case of one isolated lease arrangement. The series of three leases shows an intent to continue the business arrangement with respondents.
In reviewing the nature and quality of the contacts, we are attempting to ascertain whether the nonresidents "purposefully availed" themselves of the benefits and protections of Minnesota law. The impact in Minnesota of the transaction or tort is considered, but the foreseeability of an impact alone is not sufficient to confer personal jurisdiction. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. at 295, 100 S.Ct. at 566. The relative standing of the parties is a more important consideration in determining whether the defendant was brought into contact incidentally through the unilateral activity of the plaintiff.
The parties argue over the importance of the "buyer-seller distinction" (here lessee-lessor). It is settled that only one due process standard, the requirement of "minimum contacts," applies to all defendants. Northern States Pump & Supply Co. v. Baumann, 311 Minn. 368, 371, 249 N.W.2d 182, 185 (1976). The cases have distinguished, however, between the quality of contacts of buyers and sellers. The distinction is based primarily on the traditional scenario in which the seller is the aggressor in the interstate relationship; the seller solicits customers, advertises, or otherwise initiates the dealings. See discussion in Kreisler Manufacturing Corp. v. Homstad Goldsmith, Inc., 322 N.W.2d 567, 572-73 (Minn. 1982). Where the buyer is the aggressor, however, its buyer status will not protect it. In Northern States Pump & Supply Co. v. Baumann, 249 N.W.2d at 184, the nonresident defendant had come to Minnesota inquiring about leasing a well-drilling rig. He also negotiated and executed the contract in...
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