Maverick Paper Co. v. Omaha Paper Co., Inc.
| Decision Date | 12 August 1998 |
| Docket Number | No. CIV. A. 98-2196-KHV.,CIV. A. 98-2196-KHV. |
| Citation | 18 F.Supp.2d 1232 |
| Parties | MAVERICK PAPER COMPANY, Plaintiff, v. OMAHA PAPER COMPANY, INC., et al., Defendants. |
| Court | U.S. District Court — District of Kansas |
Timothy M. O'Brien, Shook, Hardy & Bacon L.L.P., Overland Park, KS, Edward T. Wahl, Oppenheimer, Wolff & Donnelly, Minneapolis, MN, for Maverick Paper Co.
Tim S. Haverty, Tamra Wilson Setser, Hillix, Brewer, Hoffhaus, Whittaker & Wright, L.L.C., Kansas City, MO, for Omaha Paper Co., Inc., David Powell, Robert Powell, Kevin Powell.
This matter comes before the Court on Defendant David Powell's Motion To Dismiss (Doc. # 9) filed June 5, 1998, and his Motion To Strike Affidavit of Ron Litton (Doc. # 21) filed July 22, 1998. Powell asks the Court to dismiss plaintiff's claim against him for lack of personal jurisdiction and to strike the opposing affidavit of Litton.
The Court may consider a motion to dismiss for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2) on the basis of affidavits and other written material. See Behagen v. Amateur Basketball Ass'n of U.S.A, 744 F.2d 731, 733 (10th Cir.1984), cert. denied, 471 U.S. 1010, 105 S.Ct. 1879, 85 L.Ed.2d 171 (1985). When the Court evaluates a motion to dismiss without the aid of an evidentiary hearing, plaintiff need only make a prima facie showing of jurisdiction to avoid dismissal. See Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir.1995). Well pled facts in plaintiff's complaint, as distinguished from conclusory allegations, must be taken as true to the extent they are not controverted by defendants' affidavits, and factual contradictions must be resolved in plaintiff's favor. Id.; Behagen, 744 F.2d at 733.
Maverick Paper Company is a Kansas corporation with its principal place of business in Lenexa, Kansas. David Powell ["Powell"] is Chairman of the Board of Omaha Paper Company, a Nebraska corporation which distributes paper products to customers in the Midwest. Defendant's sons, Robert Powell and Kevin Powell, serve as officers and directors for Omaha Paper.
In 1996, Omaha Paper allegedly attempted to purchase Maverick and thereby establish itself in the Kansas City Market. Omaha Paper allegedly made claims that it could deliver several key franchise rights to promote Maverick's growth. Maverick avers that in March of 1997, at a meeting at Kansas City Omaha Paper agreed to purchase 25 percent of the outstanding stock of Maverick, to obtain certain franchise rights, and to supply paper products to Maverick at its cost plus transportation. Maverick decided to forgo other business strategies and options and signed the agreement. As specified in the agreement, Kevin Powell and Robert Powell purchased stock in Maverick and began serving on its Board of Directors.
Maverick claims that Omaha Paper breached the contract by failing to acquire the promised franchise rights and by neglecting to supply paper products to it. Maverick contends that Powell played an instrumental role in Omaha Paper's breach, in that he opposed the purchase agreement, pressured his sons not to honor their commitments, and influenced paper manufacturers to avoid transactions with Maverick.
In support of its allegations plaintiff offers the sworn affidavit of Ronald Litton, Maverick's president. Litton claims that in October 1996, Powell attended a business meeting in Kansas to discuss a possible business agreement involving Omaha Paper and Maverick. Litton states that after the parties signed the agreement, Powell personally told him (at a meeting in Nebraska) that he intended to direct his sons not to pursue the franchise rights that Omaha Paper had promised to obtain. Litton further asserts that during a telephone conversation, Robert Powell told him that Powell was responsible for Omaha Paper's refusal to perform under the purchase agreement. On October 10, 1997, Powell mailed new credit terms to Robert Hatch, a Maverick shareholder who lives in Kansas City, Missouri. Litton claims that on October 23, 1997, when Hatch had not accepted Powell's demands for new credit terms, Powell notified Maverick by mail that Omaha Paper was placing it on COD status.
Maverick claims that through the actions described in Litton's affidavit, Powell tortiously interfered with the contract between Omaha Paper and Maverick and that as a result of his active opposition, Omaha Paper breached that contract. Maverick claims that due to Omaha Paper's breach and Powell's decision to transfer it to COD status, it is unable to compete in the paper business; that it has suffered lost profits in Kansas; and that it will continue to do so because Omaha Paper has done little in furtherance of the purchase agreement.
The issue is whether Powell's contacts with the State of Kansas — his pre-contractual visit to Kansas, his letter of October 10, 1997, and his interference with a contract between Omaha Paper and a Kansas resident — are sufficient for the exercise of personal jurisdiction under the Kansas Long-Arm Statute, K.S.A. § 60-308(b)(2), and the Due Process Clause of the Constitution. The Court answers that question in the affirmative.
First, the Court must consider defendant's motion to strike Litton's affidavit. Defendant argues that Litton's affidavit relies on inadmissible hearsay and legal conclusions. The Court agrees with the Honorable Judge John W. Lungstrum that it is impossible to strike a submitted affidavit and that defendant's motion to strike should therefore be overruled. If a submitted affidavit contains relevant admissible material, then the Court may rely on it in making its rulings. If the affidavit contains material that is not admissible or relevant, the Court will ignore it. Nelson v. Allstate Ins. Co., 1993 WL 105120 at *6 (D.Kan.).
The Court proceeds to consider defendant's motion to dismiss for lack of personal jurisdiction. Defendant contends that his contacts with the State of Kansas are not sufficient to support personal jurisdiction consistent with the requirements of due process. Defendant proffers two arguments in support of his motion. First, defendant argues that plaintiff complains of no "purposeful" act which can establish minimum contacts with Kansas, because plaintiff's allegations are speculative and without factual basis. Second, defendant argues that given his limited contacts with Kansas, the exercise of jurisdiction over him would violate due process.
Plaintiff encourages the Court to establish personal jurisdiction because defendant's conduct satisfies the requirements of both the Kansas Long-Arm Statute, K.S.A. § 60-308(b)(2), and the Fourteenth Amendment. Plaintiff counsels that defendant's alleged tortious acts, occurring outside Kansas, meet the standards of K.S.A. § 60-308(b)(2) because their resulting impact falls within the state. Plaintiff also contends that since its injuries arose from defendant's specific actions, those actions are sufficient to establish specific jurisdiction. Moreover, plaintiff alleges that defendant has purposefully availed himself of the privilege of conducting activities within Kansas.
Finally, plaintiff argues that the assertion of personal jurisdiction over defendant comports with notions of fair play and substantial justice. Plaintiff cites Key Industries, Inc. v. O'Doski, Sellers & Clark, 872 F.Supp. 858, 864 (D.Kan.1994), in which the court stated that Kansas has an interest in protecting its citizens from torts committed by non-residents. Furthermore, plaintiff avers that defendant has not shown that he would suffer any increased burden if forced to litigate in the District of Kansas.
In a diversity action, the Court determines whether it has personal jurisdiction over a nonresident defendant under Kansas law. See Dazey Corp. v. Wolfman, 948 F.Supp. 969, 971; Rambo v. American S. Ins. Co., 839 F.2d 1415, 1416 (10th Cir.1988). In analyzing defendant's motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), the Court applies a two-part test. First, it determines if defendant's conduct falls within one of the provisions of the Kansas Long-Arm Statute, K.S.A. § 60-308(b).1 Second, it examines whether defendant had sufficient minimum contacts with Kansas "such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." World-Wide Volkswagen v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Equifax Servs., Inc. v. Hitz, 905 F.2d 1355, 1357 (10th Cir.1990).
Defendant does not deny that his alleged actions fall within the reach of the Kansas Long-Arm Statute, and the Court finds that it authorizes the exercise of jurisdiction in this case. K.S.A. § 60-308(b)(2) subjects a party to the jurisdiction of the State of Kansas for the "commission of a tortious act within this state." Kansas interprets the term "tortious act" broadly, covering injuries that result from tortious acts committed outside the state. See Taylor v. Phelan, 912 F.2d 429, 432 (10th Cir.1990). Defendant allegedly interfered with a Kansas contract through his directives and a letter mailed into Kansas.2 That tortious interference allegedly caused Omaha Paper to breach its contractual obligations and caused plaintiff to sustain losses and injury in Kansas. The Court therefore concludes that for jurisdictional purposes, defendant's action constitutes the commission of a tortious act within the state. See id.
In the second inquiry, the Court focuses on the due process requirements necessary to establish specific jurisdiction since plaintiff avers that its injury is a direct result of defendant's actions. See Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 455 (10th Cir.1996). The Tenth Circuit...
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