Hardrives, Inc. v. City of LaCrosse, Wisconsin

• Decision Date: 27 February 1976
• Docket Number: No. 45527,45527
• Citation: 240 N.W.2d 814,307 Minn. 290
• Parties: HARDRIVES, INC. and A. J. Ostreng, Inc., a Joint Venture, and Hardrives, Inc., Individually, Appellants, v. CITY OF LaCROSSE, WISCONSIN, Respondent, Perry-Carrington Engineering Corp., Respondent.
• Court: Minnesota Supreme Court

Page 814

240 N.W.2d 814

307 Minn. 290

HARDRIVES, INC. and A. J. Ostreng, Inc., a Joint Venture and Hardrives, Inc., Individually, Appellants, v. CITY OF LaCROSSE, WISCONSIN, Respondent Perry-Carrington Engineering Corp., Respondent.

No. 45527.

Supreme Court of Minnesota.

Feb. 27, 1976.

Syllabus by the Court

On the facts of this case, the contacts of defendant foreign corporations with Minnesota were sufficient to subject those corporations to in personam jurisdiction in the courts of this state.

Briggs & Morgan and B. C. Hart and John L. Devney, St. Paul, for appellants.

Bronson C. LaFollette, Atty. Gen. of Wis., Maslon, Kaplan, Edelman, Borman, Brand & McNulty, Irving R. Brand and Martin G. Weinstein, Minneapolis, Charles A. Bleck and Michael E. Perino, Madison, Wis., for City of LaCrosse, Wis.

McMahon, Darby, Evavold & Price and Richard H. Darby, Winona, for Perry-Carrington Eng. Corp.

Heard before PETERSON, KELLY, and MacLAUGHLIN, JJ., and considered and decided by the court en banc.

KELLY, Justice.

Plaintiffs appeal from a pretrial judgment dismissing their action for lack of personal jurisdiction over defendants. Jurisdiction had been asserted and service of process made pursuant to the 'transacts any business' provision of our long-arm statute, Minn.St. 543.19, subd. 1(b). ¹

Plaintiffs include a joint venture composed of Hardrives, Inc., a Minnesota corporation engaged in asphalt paving, and A. J. Ostreng, Inc., a Wisconsin corporation engaged in supplying paving materials, and Hardrives, Inc., acting individually. Defendants are the city of LaCrosse, a Wisconsin municipal corporation, and Perry-Carrington Engineering Corp., a Wisconsin corporation engaged in providing engineering design and supervisory services.

Sometime prior to October 1971, LaCrosse solicited bids for improvements to its municipal airport by sending plans and specifications to persons within and outside Minnesota. After receiving bids, allegedly including some from Minnesota contractors, LaCrosse decided to award the contract to Ostreng, and on October 4, 1971, Ostreng and LaCrosse entered into a written agreement under which Ostreng was to construct the airport improvements. This agreement was apparently executed in LaCrosse. On the same day, Ostreng and Hardrives entered into a written joint-venture agreement for the purpose of completing the LaCrosse airport improvements. Whether the joint venture agreement was made before or after the contract was awarded is in dispute.

During the course of construction, Ostreng delivered aggregate from its gravel pits in Minnesota to Hardrives' plant in Minnesota. Hardrives, in turn, used the aggregate to produce the asphalt which was used in paving at the LaCrosse airport. Defendant LaCrosse and its agent, defendant Perry-Carrington inspected on a continuing basis throughout the course of construction the aggregate, bituminous, machinery, and techniques employed by plaintiffs Ostreng and Hardrives in Minnesota. LaCrosse and Perry-Carrington also conducted discussions, negotiations, and construction planning with plaintiffs Ostreng and Hardrives in Minnesota on a continuing basis throughout the course of construction.

Disputes developed in the course of performance, and plaintiffs brought the instant action, alleging:

(1) Breach of contract, breach of warranty, and misrepresentation on the part of LaCrosse in failing to make certain disclosures in the plans and specifications;

(2) Breach of contract, breach of warranty, and misrepresentation on the part of defendants LaCrosse and Perry-Carrington in failing to provide competent inspection and supervision, wrongfully rejecting materials, and committing various other acts;

(3) Negligence on the part of defendants LaCrosse and Perry-Carrington in providing plans and specifications, in providing supervision, and in the engineering and design services provided.

On motion by defendants, the district court dismissed the action, holding that under our prior decisions the facts of this case did not confer jurisdiction over defendants. The issue on appeal is whether defendants' contacts with Minnesota are sufficient to subject defendants to the in personam jurisdiction of the Minnesota courts.

When a defendant challenges jurisdiction, the burden is on the plaintiff to prove the minimum contacts necessary to satisfy due process. All Lease Co. Inc. v. Betts, 294 Minn. 473, 199 N.W.2d 821 (1972). At the pretrial stage, however, the plaintiff need only make a prima facie showing of sufficient Minnesota-related activities through the complaint and supporting evidence, which will be taken as true. Wuertz v. Garvey, 287 Minn. 353, 178 N.W.2d 630 (1970).

Here, defendants moved to dismiss. We must, therefore, take the allegations contained in plaintiffs' complaint and supporting affidavits as true. So doing, the following 'facts' are established:

'(1) That LaCrosse solicited bids in Minnesota;

(2) That LaCrosse and Perry-Carrington inspected 'on a continuing basis' material, machinery, and production techniques used by plaintiffs in Minnesota;

(3) That LaCrosse and Perry-Carrington conducted negotiations, discussions, and construction planning with plaintiffs in Minnesota 'on a continuing basis throughout the course of construction.'

The question thus boils down to this: Do the allegations of the plaintiffs, when taken as true, show enough minimum contacts by defendants with the state to justify denial of a motion to dismiss for lack of jurisdiction?

The minimum-contacts test was first articulated in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and has been discussed in previous decisions of this court. Hunt v. Nevada State Bank, 285 Minn. 77, 109, 172 N.W.2d 292, 311 (1969), certiorari denied sub nom. Burke v. Hunt, 397 U.S. 1010, 90 S.Ct. 1239, 25 L.Ed.2d 423 (1970); Fourth Northwestern Nat. Bank v. Hilson Industries, Inc., 264 Minn. 110, 117 N.W.2d 732 (1962). As was stated by the court in Hanson v. Denckla 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283, 1298 (1958), due process demands 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'

Taking plaintiffs' allegations as true, as we must, it appears that defendants have purposefully availed themselves of the privilege of conducting business within the state. Any conclusion to this effect should, however, be reached only in light of the various factors which have traditionally been applied in cases of this kind.

The best summary of the pertinent factors to be considered is contained in Judge (now Justice) Blackmun's opinion in Aftanase v. Economy Baler Co., 343 F.2d 187 (8 Cir. 1965). Mr. Justice Blackmun's five factors include three primary factors: Quantity of the contacts, nature and quality of the contacts, and the connection or relationship between the cause of action and the contacts. The two secondary factors are the state's interest in providing a forum and the convenience of the parties. See, also, Thompson v. Kiekhaefer, 372 F.Supp. 715 (D.Minn.1973).

Quantity of the Contacts

While the exact quantity of the various contacts present here is not clear from the record, we are informed by the complaint that--

'LaCrosse caused construction plans, specifications and other documentary materials to be sent into the State of Minnesota for the purpose of inviting bids on * * * the improvement of LaCrosse Municipal Airport * * *. Such solicitations were made both within and outside the State of Minnesota and LaCrosse received responsive bids from Minnesota corporations with their principal place of business in Minnesota.'

The same document informs us that inspections, discussions, negotiations, and construction planning occurred 'on a continuing basis' in Minnesota. Whatever the Precise quantity of the contacts, it seems safe to say that defendants or their representatives visited Minnesota in order to conduct business with plaintiffs on several occasions, during which they enjoyed the benefits and protections of the laws of this state. Bonhiver v. Louisiana Brokers Exchange of Baton Rouge, Inc., 255 F.Supp. 254, 259 (D.Minn.1966). Whatever the precise number, the contacts appear to have been numerous and fairly frequent or regular in occurrence. Such contacts support the exercise of jurisdiction.

Nature and Quality of the Contacts

Three types of contacts are alleged in this case: Bid solicitation, inspections, and discussions of various kinds. While it appears that an allegation of bid solicitation Alone would not support jurisdiction, ² this is not merely a bid-solicitation case. Rather, the case involves inspections, negotiations, discussions, and planning sessions in Minnesota, and the question as a result is whether defendants' incursions into the state were casual and sporadic, or whether they evinced an intent to do business on a regular and systematic basis here. Nerlund v. Schiavone, 250 Minn. 160, 84 N.W.2d 61 (1957).

This question could be answered either way on these facts. On the one hand, it could plausibly be argued that the inspections and discussions here were but an incidental part of the contract performance. ³ On the other hand, it seems equally plausible to conclude that the inspections and discussions were part of the regular business activity of LaCrosse in improving its airport and part of the regular business activity of Perry-Carrington in providing engineering design and supervisory services, and that defendants came voluntarily into Minnesota to perform these activities, thus invoking the benefits and protections of Minnesota law while present in the state. Northwestern Nat. Bank of St. Paul v. Kratt, Minn., 226 N.W.2d 910 (1975); American Pollution Prevention Co. Inc. v. National Alfalfa Dehydrating & Milling Co., Minn., 230 N.W.2d 63 (1975). See, also, Hanson v....