Freeman v. Dist. Ct.

• Decision Date: 09 June 2000
• Docket Number: No. 33917.,33917.
• Citation: 1 P.3d 963,116 Nev. 550
• Parties: Mark FREEMAN, Petitioner, v. The SECOND JUDICIAL DISTRICT COURT of the state of Nevada, In and For the COUNTY OF WASHOE, and the Honorable Peter I. Breen, District Judge, Respondents, and West American Insurance Company and Ohio Casualty Insurance Company, Real Parties in Interest.
• Court: Nevada Supreme Court

1 P.3d 963

116 Nev. 550

Mark FREEMAN, Petitioner, v. The SECOND JUDICIAL DISTRICT COURT of the state of Nevada, In and For the COUNTY OF WASHOE, and the Honorable Peter I. Breen, District Judge, Respondents, and West American Insurance Company and Ohio Casualty Insurance Company, Real Parties in Interest.

No. 33917.

Supreme Court of Nevada.

June 9, 2000.

Jones Vargas and Gregory A. Brower and Albert F. Pagni, Reno, for Petitioner.

Allison, MacKenzie, Hartman, Soumbeniotis & Russell and Michael A. Pintar, Carson City, for Real Parties in Interest.

BEFORE THE COURT EN BANC.

OPINION

PER CURIAM:

In this petition we are asked if the appointment of the commissioner of insurance as an agent to receive service of legal process pursuant to NRS 680A.250,¹ by itself, subjects a non-resident insurance company to personal jurisdiction in Nevada. We hold that it does not.

FACTS

In August of 1998, Mark Freeman filed an action against West American Insurance Company ("West American") and Ohio Casualty Insurance Company ("Ohio Casualty") in Washoe County, Nevada, for malicious prosecution. Freeman has been a Nevada resident since 1994. Freeman's claim arose from previous litigation in California between Freeman and West American. The underlying dispute did not involve Nevada in any way.² Ohio Casualty is an Ohio corporation licensed to do business in Nevada since 1939. West American, a subsidiary of Ohio Casualty, is an Indiana corporation licensed to do business in Nevada since 1975. Pursuant to NRS 680A.250, each company has appointed the commissioner of insurance as its agent authorized to receive service of legal process in Nevada.

After Freeman filed his Nevada action, West American and Ohio Casualty each made a special appearance and moved to quash service of process, claiming that Nevada lacked personal jurisdiction over them. The district court granted the motion after determining that neither general nor specific jurisdiction could be established over West American and Ohio Casualty. This original petition for a writ of mandamus followed.

DISCUSSION

It is well established that a petition for a writ of mandamus is the proper means by which to challenge an order quashing service of process. Firouzabadi v. District Court, 110 Nev. 1348, 1351-52, 885 P.2d 616, 618 (1994).

There are two types of personal jurisdiction: general and specific. Trump v. District Court, 109 Nev. 687, 699, 857 P.2d 740, 748 (1993). "General jurisdiction occurs where a defendant is held to answer in a forum for causes of action unrelated to the defendant's forum activities." Id. "General jurisdiction over the defendant `is appropriate where the defendant's forum activities are so "substantial" or "continuous and systematic" that it may be deemed present in the forum.'" Id. (quoting Budget Rent-A-Car v. District Court, 108 Nev. 483, 485, 835 P.2d 17, 19 (1992)). "[S]pecific personal jurisdiction over a defendant may be established only where the cause of action arises from the defendant's contacts with the forum." Trump, 109 Nev. at 699, 857 P.2d at 748. To subject a defendant to specific jurisdiction, this court must determine if the defendant "purposefully established minimum contacts" so that jurisdiction would "comport with `fair play and substantial justice.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 90 L.Ed. 95 (1945)); see also Trump, 109 Nev. at 699-700, 857 P.2d at 748-49.

The plaintiff bears the burden of producing some evidence in support of all facts necessary to establish personal jurisdiction. Trump, 109 Nev. at 692-93, 857 P.2d at 744. The record indicates that West American did not collect any premiums in Nevada in 1997 and that Ohio Casualty collected a de minimis amount in the same year. We conclude that the insurance companies' activities in Nevada were not so substantial or continuous and systematic as to subject them to the general jurisdiction of the district court. As previously mentioned, the underlying dispute did not arise out of the insurance companies' contacts with Nevada. Therefore, the district court properly determined that it lacked specific jurisdiction over the insurance companies.

In this petition, Freeman contends that West American and Ohio Casualty consented to the general jurisdiction of Nevada's courts when the companies appointed the commissioner of insurance as an agent to receive service of legal process pursuant to NRS 680A.250. West American and Ohio Casualty argue that the mere act of appointing an agent to receive service of process does not subject a non-resident corporation to general jurisdiction. We note that Nevada has heretofore not addressed this question. Other jurisdictions, as well as legal authorities that have considered the issue, are divided.

Freeman primarily relies on Pennsylvania Fire Insurance Co. of Philadelphia v. Gold Issue Mining and Milling Co., 243 U.S. 93, 37 S.Ct. 344, 61 L.Ed. 610 (1917). In Gold Issue, the defendant insurance company obtained a license to do business in Missouri. Id. at 94, 37 S.Ct. 344. In order to obtain a license, the insurance company was required to, and did, file "with the superintendent of the insurance department a power of attorney consenting that service of process upon the superintendent should be deemed personal service upon the company so long as it should have any liabilities outstanding in the state." Id. The Missouri Supreme Court held that the insurance company was thus subject to the jurisdiction of Missouri courts. Id. at 95, 37 S.Ct. 344. The United States Supreme Court affirmed, stating that "the construction did not deprive the defendant of due process of law even if it took the defendant by surprise." Id. Gold Issue has not been expressly overruled.³

Many courts have continued to apply the holding of Gold Issue. A thorough analysis of the issue was set forth in Sternberg v. O'Neil, 550 A.2d 1105 (Del.1988). The Delaware Supreme Court recognized the dispute between the holding in Gold Issue and the "minimum contacts" analysis required under International Shoe. However, the court determined that the two theories "complement one another and are neither inconsistent nor mutually exclusive." Id. at 1110. The court described two forms of consent to jurisdiction: implied and express. Id. The court then determined that a "minimum contacts" analysis is applicable "in the absence of any other basis for the exercise of jurisdiction." Id. at 1111. The court took the view that "a state still has power to exercise general judicial jurisdiction over a foreign corporation which has expressly consented to the exercise of such jurisdiction," and thus no "minimum contacts" analysis is necessary.⁴ Id. at 1111, 1117. Thus, the court held that the Delaware court properly exercised jurisdiction over a non-resident corporation which had appointed an agent to receive service of process as a condition to conducting business in Delaware.⁵ Id.

Many courts and legal authorities agree that the appointment of an agent to receive service of process subjects a non-resident corporation to personal jurisdiction in that state. See Bane v. Netlink, Inc., 925 F.2d 637, 640 (3d Cir.1991) (holding that a corporation was subject to jurisdiction in Pennsylvania because "Pennsylvania law explicitly states that the qualification of a foreign corporation to do business is sufficient contact to serve as the basis for the assertion of personal jurisdiction"); Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196, 1200 (8th Cir.1990) ("We conclude that appointment of an agent for service of process ... gives consent to the jurisdiction of Minnesota courts for any cause of action, whether or not arising out of activities within the state. Such consent is a valid basis of personal jurisdiction, and resort to minimum-contacts or due-process analysis to justify the jurisdiction is unnecessary."); Holloway v. Wright & Morrissey, Inc., 739 F.2d 695, 698 (1st Cir.1984) (holding that a statute requiring a corporation to appoint a registered agent is not affected by New Hampshire's long arm statute); Werner v. Wal-Mart Stores, Inc., 116 N.M. 229, 861 P.2d 270, 272-73 (Ct.App.1993) (holding that personal jurisdiction could be based on a theory of consent, and determining that New Mexico courts could obtain personal jurisdiction over all corporations who had appointed a registered agent in compliance with New Mexico law); Sharkey v. Washington Nat. Ins. Co., 373 N.W.2d 421, 425-26 (S.D.1985) (holding that South Dakota courts had jurisdiction over an out-of-state insurer in regard to an insurance contract signed by a South Dakota resident in Wyoming because the insurer had appointed the South Dakota Director of Insurance as its registered agent in compliance with South Dakota law); Restatement (Second) of Conflict of Laws § 44 (1971).

West American and Ohio Casualty argue that the holding enunciated in Gold Issue was implicitly abandoned by the United States Supreme Court through its decisions in International Shoe and its progeny.

At the time Gold Issue was decided in 1917, the theory which dominated the Supreme Court's thinking about jurisdiction had been characterized as the "power principle." See 1 Robert C. Casad & William B. Richman, Jurisdiction in Civil Actions § 2-2(2)(a) (3d ed.1998). As Justice Oliver Wendell Holmes explained, "the foundation of jurisdiction is physical power." McDonald v. Mabee, 243 U.S. 90, 91, 37 S.Ct. 343, 61 L.Ed. 608 (1917). Under this theory, a court exercised jurisdiction over a foreign corporation only if the corporation was deemed to be present in the forum state or had consented to its jurisdiction. 1 Casad & Richman, Jurisdiction in Civil Actions § 2-2(3)(c)(iii).

International Shoe marked the beginning of the shift away from the power principle of personal jurisdiction toward principles of...