Federated Rural Elec. Ins. Corp. v. Kootenai Elec. Co-op., 93-3044

• Decision Date: 25 February 1994
• Docket Number: No. 93-3044,93-3044
• Citation: 17 F.3d 1302
• Parties: FEDERATED RURAL ELECTRIC INSURANCE CORPORATION, Plaintiff-Appellant, v. KOOTENAI ELECTRIC COOPERATIVE, an Idaho corporation; Fall River Rural Electric Cooperative, an Idaho corporation; Lost River Electric Cooperative, an Idaho corporation; Salmon River Electric Cooperative, an Idaho corporation; Midstate Electric Cooperative, Inc., an Oregon corporation; Hood River Electric Cooperative, an Oregon corporation; Douglas Electric Cooperative, an Oregon corporation; Lane Electric Cooperative, an Oregon corporation, Defendants, Nespelem Valley Electric Cooperative, Inc., a Washington Corporation; Ohop Mutual Light Company, a Washington corporation; Inland Power & Light Company, a Washington corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1302

17 F.3d 1302

FEDERATED RURAL ELECTRIC INSURANCE CORPORATION, Plaintiff-Appellant, v. KOOTENAI ELECTRIC COOPERATIVE, an Idaho corporation; Fall River Rural Electric Cooperative, an Idaho corporation Lost River Electric Cooperative, an Idaho corporation Salmon River Electric Cooperative, an Idaho corporation Midstate Electric Cooperative, Inc., an Oregon corporation; Hood River Electric Cooperative, an Oregon corporation; Douglas Electric Cooperative, an Oregon corporation; Lane Electric Cooperative, an Oregon corporation, Defendants Nespelem Valley Electric Cooperative, Inc., a Washington Corporation; Ohop Mutual Light Company, a Washington corporation; Inland Power & Light Company, a Washington corporation, Defendants-Appellees.

No. 93-3044.

United States Court of Appeals, Tenth Circuit.

Feb. 25, 1994.

Matthew Ross (Dale E. Fredericks and John F. Runkel, Jr., with him on the brief), of Sheppard, Mullin, Richter & Hampton, San Francisco, California, for Plaintiff-Appellant.

David F. Jurca (and Andrew J. Kinstler and Polly K. Becker of Helsell, Fetterman, Martin, Todd & Hokanson, Seattle, Washington, for Defendant-Appellee Inland; John D. Lowery of Riddell, Williams, Bullitt & Walkinshaw, Seattle, Washington, for Defendants-Appellees Ohop and Nespelem; Wesley A. Weathers of Weathers & Riley, Topeka, Kansas, for Defendants-Appellees Inland, Ohop and Nespelem, with him on the brief).

Before KELLY and BARRETT, Circuit Judges, and KANE, District Judge. ^d

PAUL KELLY, Jr., Circuit Judge.

Plaintiff-appellant Federated Rural Electric Insurance Corporation (Federated) appeals from an order dismissing eleven of sixteen defendants for lack of personal jurisdiction, Fed.R.Civ.P. 12(b)(2). We have jurisdiction under 28 U.S.C. Sec. 1291 and we affirm.

Background

Federated is an insurer of rural electric and telephone cooperatives. Defendants are rural electric cooperatives located in Washington, Idaho and Oregon that purchased policies covering the acts of directors, officers and managers (DOM policies). These DOM policies were all entered into, and all subsequent coverage changes were effected, while Federated was located in Wisconsin. In 1982, Federated relocated its headquarters to Kansas.

Several judgments were entered against the cooperatives due to acts of directors, officers and managers in connection with the Washington Public Power Supply System's default on public bonds (WPPSS). The cooperatives filed claims with and collected from Federated after Federated had relocated to Kansas.

Federated subsequently brought suit against the cooperatives, claiming that, at the time the cooperatives had either sought DOM policies or sought an increase in coverage, they had failed to apprise Federated of possible exposure to liability in connection with the WPPSS project. Fearing that they would not receive a fair trial in the state of Washington due to negative publicity associated with the WPPSS debacle, Federated filed this action in the United States District Court for the District of Kansas.

Defendants moved to dismiss under Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction, arguing that they had insufficient contacts with Kansas. The district court dismissed as to eleven of the sixteen Defendants and Federated appealed, 812 F.Supp. 1139.

Discussion

We review de novo a dismissal for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2). Rambo v. American Southern Ins. Co., 839 F.2d 1415, 1417 (10th Cir.1988).

The jurisdiction of a district court over a nonresident defendant in a suit based on diversity of citizenship is determined by the law of the forum state. Fed.R.Civ.P. 4(e). The proper inquiry is, therefore, whether the exercise of jurisdiction is sanctioned by the long-arm statute of the forum state and comports with due process requirements of the Constitution. Taylor v. Phelan, 912 F.2d 429, 431 (10th Cir.1990), cert. denied, 498 U.S. 1068, 111 S.Ct. 786, 112 L.Ed.2d 849 (1991). Because the Kansas long-arm statute is construed liberally so as to allow jurisdiction to the full extent permitted by due process, Volt Delta Resources, Inc. v. Devine, 241 Kan. 775, 740 P.2d 1089, 1092 (1987), we proceed directly to the constitutional issue.

"Minimum contacts" is the touchstone for our personal jurisdiction analysis. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). A nonresident defendant must have "minimum contacts" with the forum state such that a court may view that defendant as having "purposefully availed" itself of the protection and benefits of the laws of the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473-76, 105 S.Ct. 2174, 2182-84, 85 L.Ed.2d 528 (1985). Once minimum contacts have been established, the court must ensure that the exercise of jurisdiction "does not offend 'traditional notions of fair play and substantial justice.' " World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1979) (quoting International Shoe, 326 U.S. at 316, 66 S.Ct. at 158).

Here, Federated alleged two kinds of contact between defendants and the state of Kansas: (1) "tombstone" advertisements in the Midwest edition of the Wall Street Journal concerning the offering of WPPSS bonds, and (2) the "continuing fraud" perpetrated by Defendants in filing claims against their DOM policies while plaintiff was located in Kansas. We have previously held that evidence of mere placement of advertisements in nationally distributed papers or journals does not rise to the level of purposeful contact with a forum required by the Constitution in order to exercise personal jurisdiction over the advertiser. Williams v. Bowman Livestock Equipment Co., 927 F.2d...