Real Properties, Inc. v. Mission Ins. Co., C2-87-1061

• Decision Date: 12 August 1988
• Docket Number: No. C2-87-1061,C2-87-1061
• Citation: 427 N.W.2d 665
• Court: Minnesota Supreme Court
• Parties: REAL PROPERTIES, INC., et al., Respondent, v. MISSION INSURANCE COMPANY, et al., Defendants, George B. Holman & Co., Inc., petitioner, Appellant, Barrett Moving & Storage, Respondent.

Page 665

427 N.W.2d 665

REAL PROPERTIES, INC., et al., Respondent, v. MISSION INSURANCE COMPANY, et al., Defendants George B. Holman & Co., Inc., petitioner, Appellant Barrett Moving & Storage, Respondent.

No. C2-87-1061.

Supreme Court of Minnesota.

Aug. 12, 1988.

Syllabus by the Court

The foreign defendant's contacts with Minnesota are insufficient for personal jurisdiction in this state.

Kay Nord Hunt, Minneapolis, for appellant.

Tony R. Krall, Minneapolis, for Barrett Moving & Storage.

Teresa B. Bonner, Charles J. Lloyd, Minneapolis, for Real Properties.

Roger L. Rowlette, Minneapolis, for Mission Ins. Co.

Heard, considered, and decided by the court en banc.

SIMONETT, Justice.

This case involves once again the limits of personal jurisdiction over a foreign defendant. We find that the defendant's contacts with this state are insufficient to confer jurisdiction and we reverse.

Plaintiff-respondent Real Properties, Inc., owned a large quantity of Chinese art pieces stored in New Jersey. In July 1981, plaintiff contracted with a Minnesota firm, Barrett Moving & Storage, to package and move the art objects to Minneapolis, Minnesota. Barrett, in turn, contracted with a New Jersey corporation, George B. Holman & Co., Inc., to package the artifacts for shipment. Barrett's drivers then loaded the crates on Barrett trucks, and, operating under its own I.C.C. authority, Barrett hauled the goods to Minnesota. When the more than 30 trucks arrived in Minneapolis, the owner discovered that many of the art objects were broken, with a loss, allegedly, of over $290,000.

Initially, plaintiff Real Properties sued its own insurance company, Mission Insurance Company, with which it had all-risk coverage, for its loss. Mission, however, is apparently insolvent. Plaintiff then amended its complaint to include as additional party defendants, Barrett, Holman, and United Van Lines. Sometime thereafter plaintiff dismissed its suit against United Van Lines. Holman, the New Jersey company, asserted the defense of lack of personal jurisdiction and moved to dismiss the case against it; plaintiff countered with a motion for partial summary judgment. The trial court granted plaintiff partial summary judgment, finding personal jurisdiction over Holman. The court of appeals affirmed. Real Properties, Inc. v. Mission Ins. Co., 415 N.W.2d 379 (Minn.App.1987). We granted Holman's petition for further review.

Plaintiff's complaint alleges that Holman's negligent packing caused the breakage damage to the shipped goods. This suffices, as the trial court found and Holman does not dispute, to meet the requirements of our long arm statute, Minn.Stat Sec. 543.19, subd. 1(d) (1986) (act outside Minnesota causing property damage in Minnesota). Holman strenuously argues, however, that its contacts with Minnesota were so minimal that to be haled into our state court would be a denial of federal due process.

Holman is in the transportation business in Hackensack, New Jersey. It is licensed by the Interstate Commerce Commission to transport goods in 28 states, but not in Minnesota. It has no offices or bank accounts in this state, no local telephone, and has never advertised in Minnesota.

Holman is a member, however, as is Barrett, of United Van Lines, a Missouri corporation with I.C.C. authority to ship in all 48 contiguous states. United Van Lines has approximately 500 to 600 member-agents located nationwide, and it publishes a member-agency roster which is distributed to all agents. As an agent for United Van Lines, companies like Holman and Barrett perform a variety of functions. For a particular transaction, a company might be a booking agent, an origin or destination agent, a packing or hauling agent, or a local pick-up agent, or it might perform any combination of these roles. United Van Lines also leases trucks and trailers from its agents, and it may hire the agent's drivers (or independent drivers) to operate under United's authority. For example, while Holman cannot transport goods into Minnesota in its own capacity, it may, as United Van Lines' agent, solicit and book a shipment to or from Minnesota or it may lease its equipment and provide its drivers to United for the Minnesota shipment. United would collect the fee and share it with Holman. The permutations are almost endless when one considers not only the various agency hats worn, but also that a truck tractor may be owned by an independent driver while the trailer may be owned by the moving company, or that a driver may be an employee of either the moving company or United Van Lines or be an independent operator.

Significantly, however, in the transportation of the Chinese art objects from New Jersey to Minnesota, neither Holman nor Barrett was acting as a United Van Lines agent (which accounts, we suppose, for United being dismissed from the suit). Barrett undertook to handle the job on its own, except for hiring Holman to pack the art objects. Holman did only the packing; the crates were loaded by Barrett's drivers, who also did the hauling.

Over the years, Holman has provided some services for Barrett when both companies were acting in their independent capacities. In 1977, Barrett drivers, on two occasions, were in New Jersey and short of funds, and Holman provided cash advances. One other time in 1977 Holman provided Barrett's driver with packing material. In 1978, Barrett paid Holman to "look at a job" in New Jersey, and in 1979, Barrett paid Holman $335 to do some small jobs for one of Barrett's customers. In 1981, Holman packed the Chinese art objects, and in October of that year Barrett paid Holman $3,500 for helping with a shipment, although it is unclear what Holman did.

Also over the preceding 15 years, Holman was involved, as an agent of United Van Lines, in 18 transactions of goods shipped to or from Minnesota. In some instances Holman was the booking agent (had the initial contact with the customer and solicited the business); sometimes Holman was the origin agent (handled most of the paperwork for the trip); sometimes Holman was the hauling agent (arranged for the hauling). In at least one of these transactions, Barrett was involved. In some of these transactions, Holman leased its trucking equipment to United for the Minnesota trip or drivers that Holman had used were hired by United for the trip.

The issue before us is whether these "contacts" are sufficient to give Minnesota personal jurisdiction over Holman. A court may exercise jurisdiction over a foreign-state resident if there are sufficient minimum contacts with the forum state and conduct indicating that the nonresident could reasonably anticipate being sued there.

The principles involved are easily stated but not always easy to apply. The due process clause intends "a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980)). The test is whether the defendant had "fair warning" of being sued in the forum state, Burger King, 471 U.S. at 472, 105 S.Ct. at 2182; the defendant is deemed to have "fair warning" if it has "purposefully directed" its activities at residents of the forum, Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984), and if the plaintiff's alleged injuries "arise out of or relate to" those activities, Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984). It is not enough that the contacts be "random," "fortuitous," or "attenuated." Burger King, 471 U.S. at 475, 105 S.Ct. at 2183; Hustler Magazine, 465 U.S. at 774, 104 S.Ct. at 1478. In making this due process analysis, our court has used the five factors approach set out in Aftanase v. Economy Baler Co., 343 F.2d 187, 197 (8th Cir.1965). See, e.g., Rostad v. On-Deck, Inc., 372 N.W.2d 717, 719 (Minn.1985). ¹ This test, however, is just another way of asking whether the defendant has established enough contacts with Minnesota to justify...