Health Related Services, Inc. v. Golden Plains Convalescent Center, Inc.

• Decision Date: 10 December 1985
• Docket Number: No. WD,WD
• Citation: 705 S.W.2d 499
• Parties: HEALTH RELATED SERVICES, INC., Appellant, v. GOLDEN PLAINS CONVALESCENT CENTER, INC., Respondent. 36242.
• Court: Missouri Court of Appeals

Page 499

705 S.W.2d 499

HEALTH RELATED SERVICES, INC., Appellant, v. GOLDEN PLAINS CONVALESCENT CENTER, INC., Respondent.

No. WD 36242.

Missouri Court of Appeals,

Western District.

Dec. 10, 1985.

Motion for Rehearing and/or Transfer

to Supreme Court Overruled and Denied

Jan. 28, 1986.

Application to Transfer Denied

March 25, 1986.

Duane J. Fox and Paul G. Schepers, Burrell, Seigfreid & Bingham, Kansas City, for appellant.

Benjamin F. Mann and Carol R. Gilham, Blackwell, Sanders, Matheny, Weary & Lombardi, Kansas City, for respondent.

Before LOWENSTEIN, P.J., and SHANGLER and SOMERVILLE, JJ.

SHANGLER, Judge.

The subject matter of suit is the breach of a management contract between Health Related Services, Inc. [HRS], a Missouri corporation, and Golden Plains Convalescent Center, Inc. [Golden Plains], a Kansas Corporation. The petition invoked personal jurisdiction over the person of the nonresident defendant by service of Golden Plains outside the state of Missouri under § 506.510, RSMo Cum.Supp.1985. The petition alleged that the nonresident defendant Golden Plains submitted itself to the jurisdiction of the Missouri courts by the transaction of business with the plaintiff HRS in Missouri, within the meaning of § 506.500.1(1), RSMo Cum.Supp.1985. ¹ Service of process issued under § 506.510 and the nonresident defendant was duly served. The defendant Golden Plains moved to quash service and to dismiss the action. The court deemed the motion proven through the exhibits and affidavits submitted by the principals, and entered an order to quash the service of process upon the defendant and to dismiss the petition. ²

The principals, HRS and Golden Plains concluded a contract on April 21, 1976 whereby HRS agreed to operate and manage Golden Plains, a skilled nursing home in Hutchinson, Kansas. The term of contract was for ten years subject to extension for two additional ten-year terms at the option of either signatory. The negotiations for contract were conducted at the Golden Plains site in Kansas, and at the time of contract HRS, although a Missouri corporation, maintained its office in Prairie Village, Kansas. On March 1, 1982, HRS removed its offices across the state line to Kansas City, Missouri. A form notice that the move impended was mailed on February 15, 1982 to Golden Plains [and apparently to other clients]. The principals continued performance under the contract for some nine months until December of 1982 when Golden Plains refused further performance on the justification of a prior breach by HRS. These facts are not in dispute. The contract document was before the court as an exhibit. The actual performances made by the principals under those terms were also before the court--but in the form of affidavit and counteraffidavit, and not as testimony open for assessment by the trier of fact as to weight and credibility.

A motion to quash service of process upon a nonresident defendant in an action brought under § 506.500 raises a dual inquiry: (1) whether the acts of the defendant fall within one of the enumerations of the statute--here, whether the cause of action arose from the transaction by the nonresident corporation of any business within this state, and (2) whether those acts suffice as minimum contacts so that the exercise of judicial jurisdiction over the person of the nonresident does not offend due process of law. State ex rel. Newport v. Wiesman, 627 S.W.2d 874, 877 (Mo. banc 1982); M & D Enterprises It is evident from the articulated grounds of judgment that the order to quash the service of process upon the nonresident Golden Plains adjudicates neither inquiry but rests on the rationale that, whatever the contacts between the nonresident and the plaintiff, they were induced by the unilateral HRS remove from Kansas to Missouri, and therefore [presumably] as a matter of fair play and substantial justice may not sustain jurisdiction to bind the nonresident person to a judgment in Missouri--however purposeful, or beneficial, or substantial the Golden Plains activity with the forum:

Inc. v. Fournie, 600 S.W.2d 64, 68 (Mo.App.1980).

ORDER

Defendant's motion to quash service of summons and to dismiss is hereby GRANTED. [T]he Court believes the most important factors dictating the application of R.S.Mo. Section 506.500 in this case are:

1. The parties were originally Kansas corporations and residents. ³

2. The contract in question was negotiated and entered into Kansas in 1976.

3. The only contact with Missouri occurred when plaintiff unilaterally moved its office to Kansas City, Missouri in 1982.

4. The defendant Nursing Home is now and always has been located in Hutchinson, Kansas and defendant never had an office or facility located in Missouri.

"The foreseeability that is critical to due process ... is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." [emphasis added] World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). It is the conduct of a defendant alone toward the forum state, and not of the plaintiff [as the judgment supposes], therefore, which bears on the fairness that a nonresident expect suit to lodge there, and that defense be required there. Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958), draws that principle:

The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but 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 protections of its laws. [emphasis added]

The order of the trial court to dismiss the service of process foreshortens the Hanson v. Denckla analysis. It rules implicitly and properly that the unilateral movement by HRS from Kansas to Missouri, simpliciter, could not, as a matter of due process principle, induce the unwilled consent of the nonresident contractor Golden Plains to suit and judgment in Missouri. It rules explicitly and improperly, however, that the Golden Plains contacts with Missouri thereafter, however purposeful, continuous or beneficial, do not avail to justify subjection of such an actor to suit and judgment in that forum. The unilateral HRS initiative to conduct business in Missouri, therefore, can neither create adjudicative jurisdiction over the nonresident Golden Plains, nor preclude it. The power of a court to subject a nonresident to process and judgment exists, however, "where the contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State." [emphasis in the original], Burger King Corporation v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 2184, 85 L.Ed.2d 528 (1985); State ex rel. Sperandio v. Clymer 581 S.W.2d 377, 381 (Mo. banc 1979). The judgment of the trial court to quash services of process, therefore, is error. It neglects to determine from the proofs presented [here, the affidavits of the principals and the contract document] the essential question of fact: the contacts and affiliations, if any, purposefully undertaken by Golden Plains within Missouri, and the ultimate question of law: whether the quality and nature of that activity renders it reasonable and fair to require Golden Plains to expect suit there, and so to submit to defense and judgment there. State ex rel. Sperandio, 581 S.W.2d at 381.

A motion to quash service of process for want of jurisdiction over the person of the defendant casts the burden on the plaintiff to prove the jurisdictional fact, prima facie. Osage Homestead, Inc. v. Sutphin, 657 S.W.2d 346, 350 (Mo.App.1983). A defendant may pose the issue of lack of jurisdiction over the person either as a pleaded defense or as a preliminary motion. Rule 55.27. A court may determine the subject of the motion on the affidavits of the principals, but may direct to hear the issue on oral testimony or depositions. Rule 55.28. The use of the interrogatory practice to make interstitial proof on the issue is also sanctioned. State ex rel. Deere and Company v. Pinnell, 454 W.W.2d 889, 894[6, 7] (Mo. banc 1970). The determination of the jurisdictional issue is for the trial court "in the first instance." Pinnell, supra, at 893[4, 5]. The sufficiency of the evidence to dispel the objection of the motion and to prove, prima facie, that the exercise of jurisdiction over the person of the defendant does not offend traditional concepts of fair play and substantial justice, however, presents a matter of law--due process of law. International Shoe Company v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1946); Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978).

The evidence before the trial court on the issue of jurisdiction was the affidavit of Golden Plains chief executive officer, Kumba, with the contract and the HRS notice of removal to Missouri attached, and the affidavit of HRS president Schnaufer.

The management contract appended to the Kumba affidavit constitutes the agreement of Golden Plains that HRS manage the facility, and the agreement of HRS to undertake the management, for a term of ten years. That management entailed, among the other terms, the HRS duty

1. to supervise every departmental operation of the facility and to establish policies to be carried out by the Golden Plains personnel

2. to procure and recruit personnel for Golden Plains and to train and qualify them "on an initial and on-going basis"

3. to establish fiscal policies to be followed by the personnel, and to provide forms and systems "for all phases of the operation and training of personnel"

...