Kustom Cycles, Inc. v. Bowyer

• Decision Date: 10 December 2014
• Docket Number: No. 27019.,27019.
• Citation: 857 N.W.2d 401
• Court: South Dakota Supreme Court
• Parties: KUSTOM CYCLES, INC. d/b/a Klock Werks, Plaintiff and Appellee, v. Clint BOWYER, Defendant and Appellant.

857 N.W.2d 401

KUSTOM CYCLES, INC. d/b/a Klock Werks, Plaintiff and Appellee

v.Clint BOWYER, Defendant and Appellant.

No. 27019.

Supreme Court of South Dakota.

Argued on Oct. 7, 2014.

Decided Dec. 10, 2014.

Jack Theeler, Dustin J. Ludens, Morgan Theeler, LLP, Mitchell, South Dakota, Attorneys for plaintiff and appellee.

Alex M. Hagen, Steven W. Sanford, Caldwell, Sanford, Deibert & Garry, LLP, Sioux Falls, South Dakota, Attorneys for defendant and appellant.

Opinion

GILBERTSON, Chief Justice.

[¶ 1.] Appellant, Clint Bowyer, appeals the First Judicial Circuit Court's denial of his motion to dismiss for lack of personal jurisdiction, pursuant to SDCL 15–6–12(b)(2). Bowyer argues that he does not have sufficient minimum contacts with South Dakota such that the circuit court could constitutionally assert personal jurisdiction over him. Bowyer asks this Court to reverse the circuit court's Order Denying Bowyer's Motion to Dismiss and to remand with instructions to dismiss the Complaint for lack of personal jurisdiction.

Facts and Procedural History

[¶ 2.] Clint Bowyer is a professional race car driver who races for Michael Waltrip Racing in NASCAR's Sprint Cup Series. Bowyer resides in North Carolina and travels to various states to compete in NASCAR events. Bowyer is also a motorcycle enthusiast and has attended the motorcycle rally in Sturgis, South Dakota, on several occasions. Kustom Cycles, Inc., owned by Brian Klock, is a South Dakota corporation operating in Mitchell, South Dakota. Kustom Cycles specializes in designing motorcycle parts and the customization of motorcycles.

[¶ 3.] Klock and Bowyer first encountered each other at a NASCAR race in Daytona, Florida, in 2008. Later that fall, around November 9, the two again encountered one another at a NASCAR track in Phoenix, Arizona. Brook Phillips, the president of Total Performance, Inc., was present at this meeting. Prior to this date, Total Performance customized a 1949 Mercury automobile for Bowyer. Although the parties dispute who originated the idea, the parties agreed that Kustom Cycles would customize a motorcycle for Bowyer to match his 1949 Mercury. Bowyer asserts that Klock proposed trading his customization services for Bowyer's services in “promotional and endorsement pieces” for Klock and his vendors, as well as “special NASCAR access” for them.

[¶ 4.] Several communications relevant to this case occurred after the meeting in Phoenix. On November 11, 2008, and January 5, 2009, Phillips sent pictures of the 1949 Mercury to Kustom Cycles in order to assist Kustom Cycles in rendering concept images for the proposed customization. On January 2, 2009, Bowyer purchased a 2009 Harley Davidson motorcycle from a dealership in Mankato, Minnesota. Bowyer then contacted Kustom Cycles and requested that Kustom Cycles pick up the motorcycle and transport it to Mitchell for customization. Several days later, on January 9, 2009, Casey Bowyer—Clint Bowyer's brother and alleged agent—contacted Kustom Cycles to approve its concept images of the proposed customization. Kustom Cycles first delivered the motorcycle to Bowyer at his home in North Carolina on February 15, 2009. Apparently Bowyer was not satisfied, and Kustom Cycles returned the motorcycle to Mitchell for additional modifications. Over one month later, on March 25, 2009, Casey Bowyer contacted Kustom Cycles and requested pictures of the customized motorcycle. On April 17, 2009, Kustom Cycles delivered the motorcycle, for a second time, to Bowyer in North Carolina.

[¶ 5.] Meanwhile, Bowyer provided a number of services to Kustom Cycles. Bowyer arranged special access for Klock and his guests at a NASCAR race in Daytona, where they met and spoke with Bowyer. At that time, Bowyer also gained access to the track for Klock, who recorded himself riding the motorcycle onto the track for use in promotional materials. Bowyer also attended a four-hour photo shoot and granted Kustom Cycles permission to use his name and image for promotional purposes.¹ After Bowyer provided these services, and almost eight months after Kustom Cycles completed delivery of the motorcycle to Bowyer, Kustom Cycles sent Bowyer a bill for the work in the amount of $30,788.45. Bowyer refused to pay the bill, insisting that Klock proposed—and Bowyer performed—compensation in the form of the promotions, endorsements, and special access to NASCAR events that Bowyer previously provided.

[¶ 6.] On November 12, 2010, Casey Bowyer participated in a telephone conference with Kustom Cycles in an effort to resolve the billing dispute. This discussion was unsuccessful, and on November 23, 2011, Kustom Cycles filed a complaint against Bowyer in South Dakota for payment of the bill. Bowyer moved the circuit court to dismiss for lack of personal jurisdiction on February 26, 2013. The circuit court heard arguments on the motion on November 26, 2013. The circuit judge announced his decision to rule against Bowyer at the hearing and entered the order denying the motion on January 14, 2014. Although neither party presented evidence at the hearing, the circuit judge entered findings of fact and conclusions of law based on the parties' written submissions. Bowyer filed a petition for discretionary appeal from the circuit court's order, which this Court granted by order of April 4, 2014.

[¶ 7.] Bowyer raises two issues in this appeal:

1. Whether Bowyer had sufficient minimum contacts to give South Dakota specific jurisdiction over him.

2. Whether South Dakota's assertion of personal jurisdiction over Bowyer violated due process.

Standard of Review

[¶ 8.] Bowyer's motion to dismiss under SDCL 15–6–12(b) is a challenge to the court's jurisdiction over the person and is a question of law that we review de novo. Marschke v. Wratislaw, 2007 S.D. 125, ¶ 8, 743 N.W.2d 402, 405. The ultimate question on review is the same as that on review of a motion for summary judgment: “[I]s [Bowyer] entitled to judgment as a matter of law?” Id. (quoting Guthmiller v. Deloitte Touche, LLP, 2005 S.D. 77, ¶ 4, 699 N.W.2d 493, 496 ) (internal quotation mark omitted). Although Kustom Cycles—the party seeking to establish the court's personal jurisdiction over the defendant—has the burden of showing a prima facie case of jurisdiction, Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, 647 (8th Cir.2003), “jurisdiction need not be proved by a preponderance of the evidence until trial or until the court holds an evidentiary hearing [,]” Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991). When a court does not hold an evidentiary hearing, and instead rests its determination of personal jurisdiction solely on written submissions, we review that court's decision “in the light most favorable to the nonmoving party.” Marschke, 2007 S.D. 125, ¶ 9, 743 N.W.2d at 405 (quoting Daktronics, Inc. v. LBW Tech Co., 2007 S.D. 80, ¶ 3, 737 N.W.2d 413, 416 (quoting Stanton v. St. Jude Medical, Inc., 340 F.3d 690, 693 (8th Cir.2003) )) (internal quotation mark omitted). In such a case, “[f]or purposes of the [motion to dismiss], the court must treat as true all facts properly pled in the complaint and resolve all doubts in favor of the pleader.” Id. ¶ 8, 743 N.W.2d at 405 (quoting Guthmiller, 2005 S.D. 77, ¶ 4, 699 N.W.2d at 496 ). Furthermore, when a court does not make a personal jurisdiction determination on the merits—i.e., does not conduct an evidentiary hearing—we do not give deference to that court's factual findings. See State v. Grand River Enters., Inc., 2008 S.D. 98, ¶ 30, 757 N.W.2d 305, 316. Therefore Kustom Cycles has the burden of establishing a prima facie case for personal jurisdiction over Bowyer; however, because the circuit court's determination was based only on written submissions, we treat Kustom Cycles's properly-pleaded, factual allegations as true in our de novo review of the circuit court's resolution of Bowyer's motion to dismiss.²

Analysis and Decision

[¶ 9.] In order for a South Dakota court to have personal jurisdiction over a nonresident defendant, two conditions must be met. “The first inquiry is whether the legislature granted the court jurisdiction pursuant to South Dakota's Long Arm Statute, SDCL 15–7–2.” Daktronics, 2007 S.D. 80, ¶ 4, 737 N.W.2d at 416. Second, the assertion of jurisdiction must “comport[ ] with federal due process requirements.” Id. (quoting Denver Truck & Trailer Sales, Inc. v. Design & Bldg. Servs., Inc., 2002 S.D. 127, ¶ 9, 653 N.W.2d 88, 91 ) (internal quotation mark omitted). Bowyer concedes that the reach of South Dakota's Long–Arm Statute, SDCL 15–7–2, is coextensive with the constitutional limitations of the Due Process Clause in this case. Therefore we proceed with the remaining question before us: Whether the circuit court's assertion of personal jurisdiction over Bowyer comports with the Due Process Clause.

[¶ 10.] “The Due Process Clause of the Fourteenth Amendment constrains a State's authority to bind a nonresident defendant to a judgment of its courts.” Walden v. Fiore, ––– U.S. ––––, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014) (citing World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980) ). In order for a judgment to be valid, due process requires a defendant to have “certain minimum contacts with [the state asserting jurisdiction] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ”

Int'l Shoe Co. v. Wash., Office of Unemp't Comp. & Placement, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940) ). Although personal jurisdiction can be general or case-specific, see Fiore, ––– U.S. at –––– n. 6, 134 S.Ct. at 1121 n. 6, Kustom Cycles relies only on specific jurisdiction in this case. Therefore we apply a three-step analysis in determining whether a defendant has minimum contacts sufficient to give South Dakota personal...