Hinners v. Robey

• Decision Date: 24 March 2011
• Docket Number: No. 2009–SC–000389–DG.,2009–SC–000389–DG.
• Parties: Gerald S. HINNERS, Appellant,v.Brad ROBEY, d/b/a Robey's Pawn World, Appellee.
• Court: United States State Supreme Court — District of Kentucky

336 S.W.3d 891

Gerald S. HINNERS, Appellant,

v.Brad ROBEY, d/b/a Robey's Pawn World, Appellee.

No. 2009–SC–000389–DG.

Supreme Court of Kentucky.

March 24, 2011.

Richard E. Wentz, Adams, Stepner, Woltermann & Dusing, P.L.L.C., Covington, KY, Counsel for Appellant.David Michael Andrew, John Michael Dunn, Reminger Co., L.P.A., Ft. Mitchell, KY, Counsel for Appellee.Opinion of the Court by Justice VENTERS.

Appellant, Gerald S. Hinners, a Kentucky resident, appeals from an opinion of the Court of Appeals determining that Appellee, Brad Robey, a Missouri resident, is not subject to personal jurisdiction in Kenton Circuit Court. Hinners sued Robey over the purchase of a vehicle which Robey had advertised for sale on the Internet auction site, eBay.com. Hinners contends that the requirements of Kentucky's long-arm statute, KRS 454.210, and federal due process standards for in personam jurisdiction over Robey in relation to the transaction, were satisfied.

While we conclude that this particular eBay transaction falls within the parameters of KRS 454.210, we further conclude that this single contractual transaction fails to establish sufficient minimum contacts with Kentucky so as to make it reasonable under federal due process standards for Kentucky courts to exercise personal jurisdiction over Robey in relation to the vehicle sale. We accordingly affirm the Court of Appeals.

FACTUAL AND PROCEDURAL BACKGROUND

In the light most favorable to Hinners,¹ the facts are as follows. Robey, doing business as Robey's Pawn World, is located in Sikeston, Missouri, and Hinners is a resident of Kenton County, Kentucky. In September 2005, Robey advertised for sale, on an eBay ² auction, a 2002 Cadillac Escalade. The listing described the vehicle as having no prior collision damage, no electrical problems, that it ran remarkably quiet, and that it was “better than average.” The listing also advertised a warranty consisting of a “[f]ree 1 month/1,000 mile Service Agreement.”

At the conclusion of the auction, Hinners's bid of $25,869.00 stood as the winning offer. In accordance with the conditions of the auction, Hinners traveled to Missouri ³ to complete the transaction and take possession of the vehicle. In association with the transfer, Robey executed the necessary vehicle transfer documents to enable the registration of the vehicle in Kentucky, and the vehicle was subsequently titled and registered in this state. When Hinners took possession of the vehicle, Robey again assured him that the vehicle had never been damaged. At the completion of the sale, the parties renegotiated the sales price at $23,000.00 rather than the bid amount.⁴

Immediately after Hinners returned to Kentucky with the vehicle, its electrical system malfunctioned. Hinners took the vehicle to a mechanic for inspection, and was told that the vehicle had suffered extensive prior damage; that almost every panel on the vehicle had been damaged and had been either replaced or filled with body putty; that the vehicle had been completely repainted; and that the front doors and glass had been replaced. Shattered window glass was found in various locations in the vehicle. Following the purchase, Hinners took the vehicle in for repairs on at least six occasions, principally for electrical problems.

Hinners unsuccessfully attempted to contact Robey on several occasions to discuss the matter and to attempt to enforce the warranty advertised on the eBay listing. Having received no response, on December 22, 2005, Hinners filed a Complaint against Robey in Kenton Circuit Court. The Complaint alleged “that the Defendant defrauded the Plaintiff in that the Defendant knew, or should have known that the vehicle had been extensively damaged and failed to disclose that information to the Plaintiff.”

Robey moved pursuant to CR 12.02(b) to dismiss the Complaint for lack of personal jurisdiction on the grounds that he was a non-resident defendant and was not otherwise subject to in personam jurisdiction under Kentucky's long-arm statute, KRS 454.210, or under federal due process minimum contact standards. The trial court, however, concluded that it had personal jurisdiction over Robey. After entry of the order overruling his motion to dismiss, Robey failed to further participate in the proceedings. As a consequence, and upon motion by Hinners, the trial court entered a default judgment in favor of Hinners and awarded him damages of $36,320.05.⁵ Robey appealed the judgment.

The Court of Appeals, relying in significant part upon similar eBay and Internet cases from other jurisdictions, reversed the trial court's order, concluding that the transaction was a random, fortuitous, and attenuated contact with this state, and, accordingly, that Robey did not have sufficient minimum contacts with Kentucky to allow a Kentucky court to assert personal jurisdiction over him.

We granted discretionary review to examine in personam jurisdiction issues in relation to Internet sales transactions, such as an eBay auction.

STANDARD OF REVIEW/BURDEN OF PROOF

When a lawsuit is filed in Kentucky against a non-resident defendant, the plaintiff carries the burden of establishing jurisdiction over the defendant. Auto Channel, Inc. v. Speedvision Network, LLC, 995 F.Supp. 761, 763 (W.D.Ky.1997). Because the circuit court did not conduct an evidentiary hearing on the issue of personal jurisdiction in considering Robey's motion to dismiss pursuant to CR 12.02, Hinners “need only make a prima facie showing of jurisdiction.” CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1262 (6th Cir.1996) (Applying federal counterpart to CR 12.02). ⁶ Hinners can meet this burden by “establishing with reasonable particularity sufficient contacts between [Robey] and the forum state to support jurisdiction.” Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 887 (6th Cir.2002) (citing Provident Nat'l Bank v. California Fed. Savings & Loan Ass'n, 819 F.2d 434, 437 (3d Cir.1987)).

The question of whether our courts may exercise personal jurisdiction over Robey is an issue of law, and so our review is de novo. Appalachian Regional Healthcare, Inc. v. Coleman, 239 S.W.3d 49, 53–54 (Ky.2007) (“The question of jurisdiction is ordinarily one of law, meaning that the standard of review to be applied is de novo.”).

IN PERSONAM JURISDICTION OVER ROBEY IS CONFERRED UNDER KRS 454.210

In the recent case Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51 (Ky.2011), we reevaluated the requirements for long-arm jurisdiction against a nonresident defendant. Specifically, we overruled Wilson v. Case, 85 S.W.3d 589 (Ky.2002) and other cases that had created the impression that the language of KRS 454.210 had been subsumed by federal due process standards for exercising in personam jurisdiction over nonresidents. We clarified “that the proper analysis of long-arm jurisdiction over a nonresident defendant consists of a two-step process” under which review first proceeds under KRS 454.210 and, if jurisdiction is permissible under the long-arm statute, only then is jurisdiction under federal due process examined. Caesars, 336 S.W.3d at 57. Accordingly, we must first examine jurisdiction over Robey under KRS 454.210 independent of federal due process concerns.

KRS 454.210(2)(a) enumerates nine distinct instances in which Kentucky courts may exercise personal jurisdiction over a nonresident. Before the circuit court, Hinners argued that three of the nine provisions of KRS 454.210 authorized the extension of long-arm jurisdiction over Robey. They are specifically: ⁷

(2) (a) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a claim arising from the person's:

1. Transacting any business in this Commonwealth;

2. Contracting to supply services or goods in this Commonwealth;

...

4. Causing tortious injury in this Commonwealth by an act or omission outside this Commonwealth if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this Commonwealth, provided that the tortious injury occurring in this Commonwealth arises out of the doing or soliciting of business or a persistent course of conduct or derivation of substantial revenue within the Commonwealth....

Long-arm jurisdiction analysis is especially dependent upon the underlying facts of the individual case, so our first undertaking is to identify the relevant factual predicate for our review. Those facts are: (1) Robey, situated in Missouri, advertised the vehicle for sale on eBay; (2) Hinners, in Kentucky, submitted the winning bid; (3) Hinners traveled out-of-state to take possession of the vehicle; (4) Robey executed vehicle transfer documents to enable Hinners to obtain a Kentucky registration and title for the vehicle; (5) Robey, in his eBay listing and in oral statements to Hinners, misrepresented the condition of the vehicle; and (6) the vehicle came to Kentucky covered by Robey's warranty, the one month/1000 mile “service agreement.”

We agree with Hinners that Robey's conduct constitutes “Contracting to supply services or goods in this Commonwealth” and therefore KRS 454.210(2)(a)(2) is applicable. A plain reading of the statutory language produces the interpretation that the contract need not be made or executed “in this Commonwealth,” but, rather, only that the contract provide for the supplying of services or goods to be transported into, consumed or used in Kentucky. Here, although the final deal was executed beyond Kentucky's border, it was anticipated by the parties from the outset that the vehicle would be transported to and used in Kentucky. Clearly, Robey “contract[ed] to supply services (the warranty) or goods (the vehicle) in this Commonwealth.” Subjecting Robey to adjudication in Kentucky is therefore authorized by the statute, if the claim asserted against him is one “arising from” his contract...