Dillon Equities v. Palmer & Cay, Inc.

• Decision Date: 26 November 1986
• Citation: 501 So.2d 459
• Parties: DILLON EQUITIES d/b/a H.L. Franklin's Place v. PALMER & CAY, INC., et al. 85-604.
• Court: Alabama Supreme Court

Page 459

501 So.2d 459

DILLON EQUITIES d/b/a H.L. Franklin's Place v. PALMER & CAY, INC., et al.

85-604.

Supreme Court of Alabama.

Nov. 26, 1986.

W. Lewis Garrison, Jr. of Corley, Moncus, Bynum & De Buys, Birmingham, for appellant.

W.J. McDaniel and William A. Mudd of McDaniel, Hall, Conerly & Lusk, Birmingham, for appellees Palmer & Cay, Inc., and James F. Roberts.

Edgar M. Elliott III and LaBella S. Kyle of Rives & Peterson, Birmingham, for appellee U.S. Fire Ins. Co.

HOUSTON, Justice.

The threshold issue in this case is whether the Jefferson Circuit Court had in personam jurisdiction over defendants Palmer & Cay, Inc., and James F. Roberts.

The following facts are uncontested: The plaintiff, Dillon Equities d/b/a H.L. Franklin's Place ("Franklin's") is a Georgia corporation, whose sole asset is H.L. Franklin's Place, which is a restaurant/lounge in Birmingham, Jefferson County, Alabama.

Palmer & Cay, Inc., is a Georgia corporation, that was not licensed to do business in Alabama and had no agents physically present in Alabama at any time pertinent hereto. Roberts is an insurance agent for Palmer & Cay and is a Georgia resident; he was not physically present in Alabama at any time pertinent hereto. In 1980, Franklin's contacted Palmer & Cay and Roberts to obtain insurance on the Birmingham restaurant/lounge, which was the only real property owned by Franklin's. All negotiations between Franklin's and Palmer & Cay and its agent Roberts took place in Georgia. Continuously from 1980 through 1984, Palmer & Cay and its agent Roberts placed, maintained, and renewed coverage on the Birmingham restaurant/lounge. During this period of time, Franklin's paid to Palmer & Cay $23,589.29 in insurance premiums. These premiums were paid with income received by Franklin's from the Birmingham restaurant/lounge. For the 1983-84 policy year, Palmer & Cay, through its agent Roberts, placed the primary coverage on the restaurant/lounge with The Home Insurance Company ("The Home") and excess coverage on the restaurant/lounge with United States Fire Insurance Company ("U.S. Fire.") While these policies were in effect, a suit was filed against Franklin's charging it with violating the Alabama Dram Shop Act by selling intoxicating liquors to a person who was obviously intoxicated and who thereafter operated a vehicle in such a reckless manner that he killed a man (this suit will be referred to as the dram shop action). Franklin's notified Roberts, Palmer & Cay, The Home, and U.S. Fire of this dram shop action. The Home, as primary carrier, denied coverage, since liability arising out of the sale and distribution of alcoholic beverages was specifically excluded in the policy in effect at the time of the incident made the basis of the dram shop action against Franklin's. U.S. Fire, as excess carrier, denied coverage, since the "liquor liability" endorsement in the policy in effect at the time of the incident made the basis of the dram shop action against Franklin's was not effective due to the absence of liquor liability coverage in the primary policy written by The Home. Roberts, as agent for Palmer & Cay, countersigned The Home and U.S. Fire policies and the endorsements thereto.

Franklin's contends that Roberts, individually and as agent for Palmer & Cay, represented to Franklin's that the Birmingham restaurant/lounge was fully covered by insurance and that no additional insurance coverage was needed.

Franklin's filed a two-count complaint in the Circuit Court of Jefferson County, Alabama. The first count sought a judgment against U.S. Fire and The Home declaring that the policies issued by the two insurance companies provided coverage for Franklin's in the dram shop action. The Home and U.S. Fire filed motions for summary judgment directed toward the declaratory judgment count. These were granted, and no appeal was taken from those summary judgments. The second count sought damages against U.S. Fire, The Home, Palmer & Cay, and Roberts based on a claim of negligent procurement of insurance coverage. Palmer & Cay and Roberts filed a motion to dismiss this count, alleging, among other things, lack of in personam jurisdiction. The motion was granted, dismissing the entire cause of action against Palmer & Cay and Roberts, and dismissing the remainder of the suit against U.S. Fire and The Home. In response to the plaintiff's "Motion for Reconsideration or in the alternative Motion for Clarification of Court's Order," the trial court ruled that the court did not have in personam jurisdiction of Palmer & Cay and Roberts, and that Palmer & Cay and Roberts were indispensable parties to the litigation, without whose presence the action could not proceed.

Franklin's appeals from the order dismissing count two of the complaint. We reverse and remand.

Palmer & Cay, Inc., and its agent Roberts assert that they were never physically present in Alabama, by agent or otherwise, and that no negotiations took place in Alabama; therefore, they argue, the trial court was correct in dismissing for lack of in personam jurisdiction. We disagree.

It has long been established that physical presence in the state is not a prerequisite to effective service of process on a nonresident defendant; Milliken v. Meyer, 311 U.S. 457, 61 S.Ct. 339, 85 L.Ed. 278 (1940); see also Shrout v. Thorsen, 470 So.2d 1222 (Ala.1985). What is required is that the out-of-state resident have "some minimum contacts with this state [so that], under the circumstances, it is fair and reasonable to require the person to come to this state to defend an action." Rule 4.2(a)(2)(I), Ala.R.Civ.P.

" '[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." ' " McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Alabama's long-arm statute (Rule 4.2, Ala.R.Civ.P.) has been interpreted by this Court to extend the jurisdiction of Alabama courts to the permissible limits of due process. DeSotacho, Inc. v. Valnit...