MIDWEST, ETC. v. St. Paul Fire & Marine Ins. Co.

• Decision Date: 08 January 1981
• Docket Number: No. 79-4102.,79-4102.
• Citation: 508 F. Supp. 578
• Parties: MIDWEST ELEVATOR SYSTEMS, INC., a corporation, Jim Hart, Dan Winkle, Pat Goff, and David D. Gaumer, Plaintiffs, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a corporation, Hendrickson Distributing Company, Inc., a corporation, Fab-Weld, Inc., a corporation, Power-Hose Couplings, Inc., a corporation, Defendants.
• Court: U.S. District Court — District of Kansas

508 F. Supp. 578

MIDWEST ELEVATOR SYSTEMS, INC., a corporation, Jim Hart, Dan Winkle, Pat Goff, and David D. Gaumer, Plaintiffs, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a corporation, Hendrickson Distributing Company, Inc., a corporation, Fab-Weld, Inc., a corporation, Power-Hose Couplings, Inc., a corporation, Defendants.

No. 79-4102.

United States District Court, D. Kansas.

January 8, 1981.

Geisert, Heer & McKenna, Theodore C. Geisert, Kingman, Kan., for plaintiff.

Thomas L. Theis, Topeka, Kan., for St. Paul Fire & Marine Ins. Co.

Richard I. Stevenson, Fleeson, Gooing, Coulson & Kitch, Wichita, Kan., Ronald W. Fairchild, Eidson, Lewis, Porter & Haynes, Topeka, Kan., for Hendrickson Dist. Co., Inc.

Larry G. Pepperdine, Topeka, Kan., for Power-Hose Couplings, Inc.

MEMORANDUM AND ORDER

ROGERS, District Judge.

This is a products liability case initially filed in state court and removed to federal court pursuant to 28 U.S.C. § 1441 on the basis of diversity of citizenship of the parties. Plaintiff Midwest Elevator Systems, Inc. hereinafter Midwest Elevator is a Kansas corporation. The other individual plaintiffs are Kansas residents. Defendant St. Paul Fire and Marine Insurance Company is a Minnesota corporation. The other defendants are Indiana corporations. This matter comes before the court upon defendants' (Fab-Weld, Inc. and Power-Hose Couplings, Inc.) motions to dismiss for lack of personal jurisdiction. Defendant Power-Hose Couplings, Inc. hereinafter Power-Hose has also moved to dismiss on the basis of improper service of process.

The parties have completed discovery on the issue of personal jurisdiction over the defendants. The discovery record shows the critical jurisdictional facts to be as follows. Hendrickson Distributing Company, Inc. hereinafter Hendrickson, located in Russiaville, Indiana, and Power-Hose, located in Fort Wayne, Indiana, entered into a contract whereby Power-Hose agreed to assemble and deliver jacking systems for the construction of grain bins. Hendrickson had been manufacturing the system on its own before the agreement with Power-Hose. Power-Hose contacted Fab-Weld, another Fort Wayne area business, to produce the jacking frame involved in the system.

On April 28, 1977, Hendrickson sold a system to Midwest Elevator. A purchase order and down payment were mailed from Kingman, Kansas to Hendrickson on May 28, 1977. When the system was complete, Bill Warden, a representative of Hendrickson, delivered it to Midwest Elevator. The system was then paid for and Bill Warden remained in Kansas to assist in putting the system into operation. On August 17, 1980, the system failed and the bin at Morganville, Kansas collapsed. This action was filed in state court in Kingman, Kansas and later removed here.

The record discloses further the following facts about the defendants involved in the instant motions. Power-Hose is a power transmission and electronic distributing company. They sell hydraulic, mechanical and electrical power transmission equipment. They do not manufacture any equipment with the exception of light assembly work. They conduct virtually all of their business within a sixty mile radius of Fort Wayne, Indiana. Their advertising is limited to the local telephone directory yellow pages. Power-Hose built components to Hendrickson's specifications for the bin jacking system that is the subject of this lawsuit. Fab-Weld manufactures items for other companies. They do not manufacture and market any products of their own. They have conducted business in approximately seven states, none west of the Mississippi. Under the direction of Power-Hose, Fab-Weld fabricated the jacking frame involved in the bin jacking system.

Plaintiffs allege that jurisdiction over both Power-Hose and Fab-Weld exists pursuant to the Kansas long arm statute: K.S.A. § 60-308. The specific statutory provision relied upon, K.S.A. § 60-308(b)(7), provides as follows:

"(b) Submitting to jurisdiction—process. Any person, whether or not a citizen or resident of this state, who in person or through an agent or instrumentality does any of the acts hereinafter enumerated, thereby submits said person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of said acts:

. . . . .

(7) Causes injury to persons or property within this state arising out of an act or omission outside of this state by the defendant, provided in addition, that at the time of the injury either (i) the defendant was engaged in solicitation or service activities within this state; or (ii) products, materials or things processed, serviced or manufactured by the defendant anywhere were used or consumed within this state in the ordinary course of trade or use;"

Plaintiffs contend that the defendants caused an injury to property within this state arising out of an act or omission outside the State of Kansas. They assert that it would be consonant with fairness to subject these defendants to jurisdiction whenever their products cause injury within the State of Kansas. They believe that there can be no "unfairness in forbidding Power-Hose and Fab-Weld to disassociate themselves from their products built and sold by Hendrickson." It is the plaintiffs' position that it was foreseeable that the defendants' products would be used in Kansas.

The defendants refute the plaintiffs' contentions by asserting that they lack the requisite "minimum contacts" with Kansas necessary to subject them to personal jurisdiction under the Kansas long arm statute. Defendants contend that they had no knowledge that this system would be sold in Kansas. It is undisputed that neither of these defendants is licensed to do business in Kansas; neither maintains offices or places of business in Kansas; and neither was ever physically present in the state with regard to this transaction.

This court has recently had the opportunity to discuss in personam jurisdiction under the Kansas long arm statute in Thermal Insulation Systems, Inc. v. Ark-Seal Corp., 508 F.Supp. 434 (D.Kan., 10/9/80). This court established that the following analysis is the appropriate one to be followed when considering personal jurisdiction questions:

"First, it must be determined whether the defendant's conduct falls within the scope of any of the enumerated provisions of the Kansas long arm statute. Then, it must be determined whether the defendant's contacts with the state of Kansas are sufficient to meet the due process requirements set out in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed.2d 95 (1945), and further developed in Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), Kulko v. Superior Court, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978) and most recently in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Both the statutory and constitutional requirements must be met for this court to assert personal jurisdiction over the defendant."

In cases based upon diversity jurisdiction, personal jurisdiction over a defendant is to be determined in accordance with the law of the state where the federal district court is located. Wilshire Oil Co. v. Riffe, 409 F.2d 1277 (10th Cir. 1969); Stonecipher v. Sexton, 54 F.R.D. 435 (D.Kan. 1972). The burden is on the plaintiff to present a prima facie case that the constitutional and statutory requirements for the assumption of personal jurisdiction have been satisfied. Thermal Insulation Systems, Inc. v. Ark-Seal Corp., supra; Ammon v. Kaplow, 468 F.Supp. 1304 (D.Kan.1979). A court may consider affidavits and documentary evidence in considering whether such a showing has been made. Id. The court shall give the plaintiff the benefit of all factual doubts. Id. With these considerations in mind, this court will first look at plaintiffs' contention that jurisdiction exists under K.S.A. § 60-308(b)(7).

Subsection (b)(7), formerly (b)(5), was borrowed from Wisconsin law, and was intended to provide jurisdiction over foreign manufacturers or suppliers in product liability cases. Tilley v. Keller Truck and Implement Corp., 200 Kan. 641, 438 P.2d 128 (1968); J.E.M. Corp. v. McClellan, 462 F.Supp. 1246 (D.Kan.1978). Few Kansas cases have discussed in any detail the statutory requirements of K.S.A. § 60-308(b)(7). See Tilley v. Keller Truck and Implement Corp., supra; J.E.M. Corp. v. McClellan, supra; Murrell v. Parnes, No. 77-1461 (D.Kan., 5/22/79); Soper v. Signode Corp., No. 77-2014 (D.Kan., 3/3/78). This court will focus its discussion on K.S.A. § 60-308(b)(7)(ii) since plaintiffs have not controverted defendants' evidence that they do not and were not engaged in solicitation or service activities within Kansas as provided in K.S.A. § 60-308(b)(7)(i). No Kansas cases have interpreted the requirement concerning the use of a defendant's products in the ordinary course of trade or use, but the Wisconsin courts have interpreted the Wisconsin statute after which the Kansas provision was copied. These cases have held that the standard is not met when only one product marketed by the defendant is within the forum at the time of the injury. McPhee v. Simonds Saw and Steel Co., 294 F.Supp. 779 (W.D.Wis.1969); Davis v. Mercier-Freres, 368 F.Supp. 498 (E.D.Wis.1973); Hasley v. Black, Sivalls & Bryson, Inc., 70 Wis.2d 562, 235 N.W.2d 446 (1975); Schmitz v. Hunter Machinery Co., 89 Wis.2d 388, 279 N.W.2d 172 (1979).

In McPhee, the plaintiff was injured by an allegedly defective saw. The manufacturer and distributor of one of the major component parts of the product moved for dismissal for lack of personal jurisdiction. The court granted the motion to dismiss on the basis that the record showed that only a single unit produced by that defendant was in use in the State of Wisconsin. The court discussed the Wisconsin statute, which is in all material respects...