State Farm Mut. Ins. Co. v. Conyers

• Citation: 1989 NMSC 71,109 N.M. 243,784 P.2d 986
• Decision Date: 29 November 1989
• Docket Number: No. 17600,17600
• Parties: STATE FARM MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. Dewey CONYERS and Kay Conyers, his wife, Defendants-Appellants.
• Court: Supreme Court of New Mexico

Page 986

784 P.2d 986

109 N.M. 243

STATE FARM MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. Dewey CONYERS and Kay Conyers, his wife Defendants-Appellants.

No. 17600.

Supreme Court of New Mexico.

Nov. 29, 1989.

[109 NM 243] Duhigg, Cronin & Spring, Frank L. Spring and David M. Berlin, and Bruce P. Moore, Albuquerque, for defendants-appellants.

Foy, Foy & Jollensten, Celia Foy Castillo, Silver City, for plaintiff-appellee.

OPINION

BACA, Justice.

Dewey and Kay Conyers appeal from a district court order granting State Farm Mutual Insurance Company (State Farm) summary judgment, holding that the substantive law of New Mexico should apply in determining the amount of policy proceeds State Farm owed the Conyers and that State Farm did not owe the Conyers any further payments under its policy. The main issue of whether the court erred in granting State Farm summary judgment can be divided into three sub-issues: (1) whether the Conyers had sufficient minimum contacts with New Mexico for the court to properly exercise personal jurisdiction over them under NMSA 1978, Section 38-1-16(A)(1) (Repl.Pamp.1987) of the New Mexico long-arm statute; (2) whether minimum contacts existed to satisfy due process; and (3) whether New Mexico should change its approach to contractual choice of law rules. We affirm.

In August 1982, Kay Conyers purchased automobile insurance in Silver City, New Mexico, from State Farm agent, Roy Lewis, covering the Conyers' Ford truck with $25,000 in underinsured motorist coverage. In June 1984, Kay Conyers purchased additional automobile insurance from Roy Lewis in Silver City covering the Conyers' Jeep with $25,000 in underinsured motorist coverage. On each insurance application, Kay Conyers gave a Silver City mailing address and listed her husband's and her New Mexico driver's license numbers. The Ford truck had a New Mexico license plate until February 1987.

Dewey Conyers was a union ironworker who was assigned jobs with different companies at various job sites in and out of New Mexico. The Conyers, by affidavit, state that they resided in Silver City from May 1981 to April 1982, and from August 1982 to January 1983. The Conyers lived in Silver City between jobs. From January 1983 until December 26, 1984, the Conyers lived in California. After December 26, 1984, the Conyers moved to Tonopah, Nevada. On March 28, 1985, Dewey Conyers, a passenger in an automobile driven by Jerry Jordan (Jordan), was injured in an automobile accident in Nevada. Allstate Insurance Company (Allstate), the liability insurance carrier for Jordan, paid Dewey Conyers $25,000, the policy liability limits. State Farm paid Dewey Conyers underinsured motorist benefits of $25,000 under the policy covering the Jeep but failed to tender an additional $25,000 under the other policy. Conyers claimed his medical expenses exceeded $25,000 and demanded the entire $50,000 in underinsured motorist benefits available under both policies from State Farm.

Subsequently, State Farm brought a declaratory judgment action in the New Mexico district court, seeking a determination that it owed no further payments to Dewey Conyers because it could offset against its underinsured motorist coverage limits the amount of $25,000 liability coverage Allstate previously paid. The Conyers entered a special appearance before the court contesting the court's jurisdiction over them and filed a motion to dismiss the declaratory judgment for lack of personal jurisdiction, improper venue, forum non conveniens, and failure to state a claim upon which relief can be granted. On July 29, 1987, the court denied the motion. On May 8, 1987, the Conyers moved for partial summary judgment contending that Nevada law should apply to determine the distribution of the underinsured motorist proceeds. On May 29, 1987, State Farm moved for summary judgment, which the court granted.

PERSONAL JURISDICTION

We first consider whether the court had personal jurisdiction over the Conyers in New Mexico under Section 38-1-16, our long-arm statute. The long-arm statute sets out five different types of acts, which if conducted in the State of New Mexico, submit the actor to the jurisdiction of the courts of this state if any cause of action should arise from such acts. These include the transaction of any business, the operation of a motor vehicle, the commission of a tort, the contracting to insure, and residence within the state for divorce actions if one spouse continues to live in New Mexico.

We use a three-step test to decide whether personal jurisdiction exists over nonresident, out-of-state defendants: (1) the defendant's act must be one of the five enumerated in the long-arm statute; (2) the plaintiff's cause of action must arise from the act; and (3) minimum contacts sufficient to satisfy due process must be established by the defendant's act. Salas v. Homestake Enterprises, Inc., 106 N.M. 344, 345, 742 P.2d 1049, 1050 (1987). State Farm did not specify which of the five acts enumerated in the long-arm statute it relied on to assert personal jurisdiction over the Conyers. State Farm did allege in its complaint that it issued an insurance policy to the Conyers in Silver City, New Mexico. By purchasing insurance in New Mexico, the Conyers transacted business in this state. On appeal, the Conyers do not assert that another section of the long-arm statute is applicable.

The Conyers argue that State Farm failed to meet one element of the Salas in personam jurisdiction test set out above, by failing to show that its cause of action directly arose from the defendant's transaction of business in the State of New Mexico. In Winward v. Holly Creek Mills, Inc., 83 N.M. 469, 472, 493 P.2d 954, 957 (1972), we stated that a close relationship must exist between the act committed by the defendant and the plaintiff's claim. " '[T]he statutory phrase "arising from" requires only that the plaintiff's claim be one which lies in the wake of the commercial activities by which the defendant submitted to the jurisdiction of the [forum's] courts.' " (Quoting Koplin v. Thomas Haab Botts, 73 Ill.App.2d 242, 253, 219 N.E.2d 646, 651 (1966).) The Conyers maintain State Farm's cause of action is not related to the purchase and sale of insurance; rather they claim the accident in Nevada forms the prerequisite of State Farm's liability. The Conyers misconstrue the "arising from" element of the personal jurisdiction test by an inappropriate contrast between the accident and State Farm's claim. The correct determination should be whether State Farm's cause of action arose from business activities performed in New Mexico by the defendants. The Conyers submitted themselves to the jurisdiction of New Mexico courts by conducting business in New Mexico. They cannot now escape jurisdiction by claiming that the accident itself occurred outside the state boundaries. State Farm's cause of action for declaratory judgment to determine the extent of insurance coverage is closely related to the transaction of business between State Farm and the Conyers--the negotiation and purchase of insurance in New Mexico. Indeed, if the Conyers had not purchased insurance in New Mexico, no cause of action would exist. This transaction of business in New Mexico between State Farm and the Conyers creates sufficient minimum contacts with New Mexico for the court to exercise personal jurisdiction over the Conyers.

MINIMUM CONTACTS--DUE PROCESS

The Conyers also assert that the court erred in finding that they had sufficient minimum contacts with New Mexico to satisfy due process constraints. Precedent exists in New Mexico which establishes that the "transaction of any business" element of the long-arm statute is sufficient to fulfill the due process standard of minimum contacts. This is true only if the cause of action arises from the particular transaction of business, and the minimum contacts were purposefully initiated by the defendant. Customwood Mfg., Inc. v. Downey Constr. Co., 102 N.M. 56, 691 P.2d 57 (1984). For a forum to assert personal jurisdiction over defendants, due process requires that defendants "have certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " International Shoe Co. v. Washington, 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, 342, 85 L.Ed. 278 (1940)). To judge minimum contacts, "a court properly focuses on the relationship among 'the defendant, the forum, and the litigation.' " Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775, 104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984) (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2579, 53 L.Ed.2d 683 (1977)).

The key focus in analyzing minimum contacts is that the defendant by some act "purposefully avails [him]self of the privilege of conducting activities within the forum State, thus invoking the benefits ... of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). "[W]here the defendant 'deliberately' has engaged in significant activities within a state, Keeton v. Hustler Magazine, Inc., [465 U.S.] at 781 , or has created 'continuing obligations' between himself and residents of the forum, Traveler's Health Ass'n v. Virginia, 339 U.S. [643, 648, 70 S.Ct. 927, 930 94 L.Ed. 1154 (1950) ], he manifestly has availed himself of the privilege of conducting business there." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S.Ct. 2174, 2183-84, 85 L.Ed.2d 528 (1985). We also review the nature of the transaction, the applicability of New Mexico law, the contemplation of the parties and the location of potential witnesses to determine if minimum contacts exist. Kathrein v. Parkview Meadows, Inc., 102 N.M. 75, 76-77, 691 P.2d 462, 463-64 (1984). Finally, we observe that a single transaction of business within this...