Three Ten Enterprises, Inc., Foam Form v. State Farm Fire & Cas. Co.

• Decision Date: 12 July 1997
• Docket Number: No. 75483,75483
• Citation: 942 P.2d 62,24 Kan.App.2d 85
• Parties: THREE TEN ENTERPRISES, INC., FOAM FORM, a Limited Partnership, Appellee/Cross-Appellant, v. STATE FARM FIRE & CASUALTY COMPANY, Appellant/Cross-Appellee.
• Court: Kansas Court of Appeals

Page 62

942 P.2d 62

24 Kan.App.2d 85

THREE TEN ENTERPRISES, INC., FOAM FORM, a Limited Partnership, Appellee/Cross-Appellant, v. STATE FARM FIRE & CASUALTY COMPANY, Appellant/Cross-Appellee.

No. 75483.

Court of Appeals of Kansas.

July 12, 1997.

Review Denied Sept. 23, 1997.

Syllabus by the Court

1. The Kansas long arm statute is liberally construed to assert personal jurisdiction over nonresident defendants to the full extent permitted by the Due Process Clause of the Fourteenth Amendment to the United States Constitution. When considering questions of personal jurisdiction, a two-step analysis is required. First, does the defendant's conduct fall within the scope of the relevant provision of the Kansas long arm statute? Second, does the exercise of personal jurisdiction in the particular case comply with the due process requirements of the Fourteenth Amendment as set out in the decisions of the United States Supreme Court?

2. When a state exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum, the state is exercising specific jurisdiction over the defendant. When a state exercises personal jurisdiction over a defendant in a suit not arising out of or related to the defendant's contacts with the forum, the state has been said to be exercising general jurisdiction over the defendant. A state court can, consistent with federal due process, assert general jurisdiction over a foreign corporation.

3. When the language of a statute is plain and unambiguous, a court must give effect to that language, not rewrite the statute.

4. K.S.A. 60-308(b) does not provide for the exercise of general jurisdiction by Kansas courts.

Gerald A. King and Lynn W. Hursh, of Armstrong, Teasdale, Schlafly & Davis, Kansas City, for appellant/cross-appellee.

Scott Martin, of Blackwell Sanders Matheny Weary & Lombardi, Kansas City, for appellee/cross-appellant.

Before GREEN, P.J., ROYSE, J., and JENNIFER JONES, District Judge, assigned.

ROYSE, Judge:

Three Ten Enterprises, Inc., Foam Form (Three Ten) brought this action against State Farm Fire & Casualty Company (State Farm) to recover losses insured under the employee dishonesty coverage contained in a business policy. State Farm filed a motion to dismiss for lack of personal jurisdiction. The district court denied State Farm's motion and later entered judgment against State Farm. State Farm appeals, and Three Ten cross-appeals.

Three Ten is a limited partnership organized under the laws of the State of Kansas. Three Ten does business under the name Three Ten Insulated Forms in Papillion, Nebraska. State Farm is a foreign corporation authorized to do business in Kansas.

State Farm, through its office in Lincoln, Nebraska, issued a business policy to Three Ten covering Three Ten's premises located in Papillion. The policy had an initial term of 1 year, beginning on March 22, 1990. Three Ten renewed the policy each year on March 22.

During the policy term that began on March 22, 1991, a Three Ten employee, Debbie Karstens, stole approximately $38,006.50 from Three Ten. The following year, Karstens stole approximately $65,445.40 from Three Ten.

Three Ten made a claim with State Farm under the employee dishonesty provisions of its business policy. State Farm paid a total of $50,000 to Three Ten, contending that Karstens' thefts were one occurrence under the policy and thus subject to its $50,000 policy limit.

Three Ten filed suit in Miami County, Kansas, asserting a claim for an additional payment under the policy of $38,006.50. Three Ten contended that under Nebraska law, Karstens' thefts were separate acts and that renewing the policy triggered a new policy limit. Service of process was made on State Farm through the Kansas Commissioner of Insurance, who mailed the summons and petition to State Farm at its home office in Bloomington, Illinois.

State Farm filed a motion to dismiss for lack of personal jurisdiction. The district court denied the motion on the basis of "general jurisdiction." Three Ten filed a motion for summary judgment on the merits. The district court, in a lengthy opinion examining Nebraska law, granted the motion and entered judgment for Three Ten for $38,006.50. The district court denied Three Ten's motion for attorney fees under Nebraska law.

State Farm filed an appeal from the district court's decision, claiming the district court erred in asserting personal jurisdiction over State Farm and in concluding that State Farm owed Three Ten additional funds under the policy. Three Ten filed a cross-appeal, claiming the district court erred in denying its claim for attorney fees under Nebraska law.

State Farm's first argument on appeal is that the district court lacked personal jurisdiction over State Farm, because Three Ten's cause of action against State Farm did not arise from the transaction of any business in Kansas. Three Ten takes the position that jurisdiction was properly exercised under the doctrine of "general jurisdiction." The district court relied on "general jurisdiction" in denying State Farm's motion to dismiss.

Resolution of the jurisdiction issue in this case requires us to interpret K.S.A. 60-308(b). Interpretation of a statute is a question of law subject to unlimited review on appeal. Foulk v. Colonial Terrace, 20 Kan.App.2d 277, Syl. p 1, 887 P.2d 140 (1994), rev. denied 257 Kan. 1091 (1995).

K.S.A. 60-308 is the Kansas long arm statute. It provides in pertinent part:

"(b) ... 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 the person and, if an individual, the individual's personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of these acts: ...."

The plaintiff bears the burden of proving the existence of personal jurisdiction over the defendant. St. Paul Surplus Lines Ins. Co. v. International Playtex, Inc., 245 Kan. 258, 263, 777 P.2d 1259 (1989), cert. denied 493 U.S. 1036, 110 S.Ct. 758, 107 L.Ed.2d 774 (1990). Where, prior to trial, a motion to dismiss for lack of personal jurisdiction is determined based upon affidavits and other written materials, the plaintiff need only make a prima facie showing. In re Hesston Corp., 254 Kan. 941, Syl. p 1, 870 P.2d 17 (1994).

The approach required in resolving issues under the long arm statute has frequently been stated:

" 'The Kansas long arm statute is liberally construed to assert personal jurisdiction over nonresident defendants to the full extent permitted by the due process clause of the Fourteenth Amendment to the U.S. Constitution.

....

" '[W]hen considering questions of personal jurisdiction, a two-step analysis is required. First, does the defendant's conduct fall within the scope of the relevant provision of the Kansas long arm statute? Second, does the exercise of personal jurisdiction in the particular case comply with the due process requirements of the Fourteenth Amendment as set out in the decisions of the United States Supreme Court?' " St Paul, 245 Kan. at 263, 777 P.2d 1259 (quoting Volt Delta Resources, Inc. v. Devine, 241 Kan. 775, 777-79, 740 P.2d 1089 [1987] ).

See Schlatter v. Mo-Comm Futures, Ltd., 233 Kan. 324, 329, 662 P.2d 553 (1983); Source Direct, Inc. v. Mantell, 19 Kan.App.2d 399, 404, 870 P.2d 686 (1994); Environmental Ventures, Inc. v. Alda Services Corp., 19 Kan.App.2d 292, 295, 868 P.2d 540 (1994); Eferakeya v. Twin City State Bank, 13 Kan.App.2d 197, 209, 766 P.2d 837 (1988), aff'd as modified 245 Kan. 154, 777 P.2d 759 (1989); Davis v. Grace, 4 Kan.App.2d 704, 707-08, 610 P.2d 1140 (1980). "[T]he activities of defendants are measured by due process standards if they fall within the scope of a provision of 60-308(b)." Hesston Corp., 254 Kan. at 951, 870 P.2d 17. See Casad, Long Arm and Convenient Forum, 20 Kan. L.Rev. 1, 45 (1971).

State Farm's argument focuses on the statutory test for long arm jurisdiction. State Farm contends that Three Ten's cause of action did not arise from the transaction of any business within this state, as provided in K.S.A. 60-308(b)(1). Three Ten does not directly dispute this contention. While pointing out that State Farm does transact business in Kansas, Three Ten makes no claim that its cause of action arises out of State Farm's Kansas business activities.

Rather than attempting to show that its claim falls within the parameters of 60-308(b), Three Ten relies on the doctrine of "general jurisdiction." The difference between "specific jurisdiction" and "general jurisdiction" was described in Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984):

"[W]hen a State exercises personal jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum, the State is exercising 'specific jurisdiction' over the defendant. [Citation omitted.]

"When a State exercises personal jurisdiction over a defendant in a suit not arising out of or related to the defendant's contacts with the forum, the State has been said to be exercising 'general jurisdiction' over the defendant." 466 U.S. at 414 nn. 8, 9, 104 S.Ct. at 1872 nn. 8, 9.

See Hesston Corp., 254 Kan. at 958-59, 870 P.2d 17 Casad, Jurisdiction in Civil Actions § 1.02 (2d ed. 1991). In Perkins v. Benguet Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952), the Supreme Court held that a state court could, consistent with federal due process, assert general jurisdiction over a foreign corporation. See Twitchell The Myth of General Jurisdiction, 101 Harvard L.Rev. 610, 626 (1988).

Three Ten's reliance on "general jurisdiction" is misplaced. As each of the cases cited by Three Ten shows, "general jurisdiction" is a due process concept. It does not excuse a plaintiff who invokes the jurisdiction of...