WALTON R. HADDIX; and CLEARFORK CONSTRUCTION CO., INC. v. TIM HULL, D/B/A HULL BROS. CONSTRUCTION CO.
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RENDERED: May 6, 2005; 2:00 p.m.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2003-CA-001559-MR
WALTON R. HADDIX; and
CLEARFORK CONSTRUCTION CO., INC.
v.
APPELLANTS
APPEAL FROM CLINTON CIRCUIT COURT
HONORABLE EDDIE C. LOVELACE, JUDGE
ACTION NO. 99-CI-00144
TIM HULL, D/B/A
HULL BROS. CONSTRUCTION CO.
APPELLEE
OPINION
VACATING AND REMANDING
** ** ** ** **
BEFORE:
HENRY AND VANMETER, JUDGES; MILLER, SENIOR JUDGE.1
VANMETER, JUDGE:
This is an appeal from an order entered by the
Clinton Circuit Court sustaining appellee Tim Hull’s motion to
dismiss the underlying action for lack of personal jurisdiction.
For the reasons stated hereafter, we vacate the trial court’s
order and remand this matter for further proceedings.
1
Senior Judge John D. Miller sitting as Special Judge by assignment of the
Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and
Kentucky Revised Statutes 21.580.
The underlying facts were well summarized by the trial
court as follows:
1.
[Appellants Walton R.] Haddix and
Clearfork [Construction Co., Inc.] filed
their complaint in this action on
September 15, 1999. Haddix is the
director and sole officer of Clearfork,
and is a resident of Clinton County,
Kentucky. Hull [d/b/a Hull Construction
Co.] is a resident of Fentress County,
Tennessee.
2.
In their complaint, Haddix and Clearfork
allege that Hull breached an oral
contract wherein he agreed to repay
Haddix and Clearfork for certain
expenses associated with the
construction of a natural gas pipeline.
The pipeline in question originated in
Monroe County, Kentucky, near the city
of Gamaliel, and spanned the state
border into Clay County, Tennessee.
3.
Haddix and Clearfork assert that they
were never reimbursed $4,000.00 they
paid as a down payment on a tractor
purchased in Crossville, Tennessee.
Haddix and Clearfork also assert they
were never repaid the sums of $4,700.00
and $9,000.00 for expenses incurred in
the various phases of construction of
the pipeline. In addition, Haddix and
Clearfork complain that they were never
reimbursed $1,000.00 for a Craftsman
generator purportedly stolen from Hull’s
shop in Allardt, Tennessee, and
$1,000.00 for a Barton gas meter which
was borrowed by Hull for use on a gas
well in Campbell County, Tennessee, but
never returned.
4.
Haddix and Clearfork were initially
represented by counsel when the
Complaint was filed. On October 28,
1999, Hull filed a motion to dismiss the
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action, due to a lack of personal
jurisdiction and lack of jurisdiction
over the subject matter of the action.
Hull’s motion was not accompanied by a
brief or an affidavit. This initial
“barebones” motion was overruled by this
Court on December 3, 1999. Hull and
Haddix were deposed on February 2, 2000.
5.
No activity occurred in this case for a
year following the depositions of the
parties. On June 18, 2001, counsel for
Haddix and Clearfork made an oral motion
to amend the Complaint, and the motion
was granted. Haddix and Clearfork were
given 90 days to file their amended
Complaint. In addition, this Court
ordered all proof to be taken in this
action by September 18, 2001. On
October 1, 2001, this Court gave the
parties an extension of time to November
1, 2001 for the taking of proof. The
action was then to stand submitted for
entry of a decision by this Court.
6.
No amended Complaint was filed for over
a year. Counsel for Haddix and
Clearfork moved to withdraw from his
representation, on the ground that his
employment had been terminated. Counsel
for Haddix and Clearfork was permitted
to withdraw from the case on May 20,
2002. Haddix filed a pro se amended
Complaint on May 24, 2002.
7.
Haddix and Clearfork make several
additional allegations in their amended
Complaint. They assert that Hull failed
to reimburse them for $2,000.00 worth of
gas pipe that was sold by Hull to
another party; $3,700.00 for copper
wire; $17,600.00 in labor expenses paid
by Haddix and Clearfork to Hull’s
employees; $2,250.00 in rent paid by
Haddix and Clearfork for a home in
Celina, Tennessee to house Hull’s
employees during the construction of the
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pipeline; and an additional $25,000.00
in various labor and expenses for which
Hull wrote Haddix and Clearfork a “cold
check.” The labor in question was
allegedly performed in both Kentucky and
Tennessee. Haddix and Clearfork also
demanded the return of a Case plow
purportedly retained by Hull at his shop
in Allardt, Tennessee.
8.
On July 5, 2002, Haddix filed a pro se
request for the production of documents.
On September 28, 2002, Haddix moved to
compel answers to his requests for the
production of documents. Hull was given
30 days to answer the discovery requests
by this Court on October 7, 2002. On
November 27, 2002, Haddix once more
moved to compel answers to his discovery
requests. Haddix’s motion was continued
for compliance by Hull, and this Court
noted that the motion would be
redocketed if Hull failed to answer
Haddix’s discovery requests.
9.
On March 26, 2003, Hon. Luther C.
Conner, Jr., an attorney, filed a motion
for default judgment and motion for
contempt of court on Haddix’s behalf, on
the ground that his discovery requests
had never been answered. Some nine (9)
months had elapsed since Haddix filed
his pro se discovery requests. A
response to Haddix’s discovery requests
was filed on April 21, 2003. On that
date, this Court continued Haddix’s
motions for contempt of court and for
default judgment, to allow counsel for
Haddix an opportunity to review the
discovery responses filed by Hull’s
counsel. On May 3, 2003, Hull’s counsel
filed a second motion to dismiss the
action, based on a lack of personal
jurisdiction over Hull.
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(Footnotes omitted.)
Relying on the Kentucky Supreme Court’s
recent opinion in Wilson v. Case,2 the trial court dismissed the
matter for lack of personal jurisdiction over Hull.
This appeal
followed.
Wilson addressed a situation in which an agreement was
reached concerning the sale of an airplane by a Kentucky seller
(Wilson) to a Maryland purchaser.
A pilot (Case) traveled to
Kentucky, tendered the purchaser’s check to Wilson, and took
possession of the plane.
The sale fell through after the plane
crashed while landing in Maryland.
Wilson repossessed the plane
and filed a negligence action against Case, but the Jefferson
Circuit Court dismissed the action for lack of personal
jurisdiction over Case.
This court affirmed on appeal, and the
supreme court accepted the matter for discretionary review.
In affirming the lower courts’ decisions, the supreme
court described the development of the personal jurisdiction
doctrine during the last sixty years as follows:
In the landmark case of International Shoe
Co. v. Washington, 326 U.S. 310, 316, 66
S.Ct. 154, 158, 90 L.Ed. 95 (1945), the
Court departed from long-standing literal
“presence” requirements and determined that
a nonresident defendant can be subject to a
judgment in personam if he has “certain
minimum contacts with [the forum] such that
the maintenance of the suit does not offend
‘traditional notions of fair play and
substantial justice.’” (quoting Milliken v.
2
85 S.W.3d 589 (Ky. 2002).
-5-
Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85
L.Ed. 278 (1940)).
Though the Court refrained from
defining “minimum contacts,” it suggested
several factors to consider in determining
whether the minimum contacts requirement was
met. Among those factors are the following:
the quantity and quality of the activities;
whether the activities of the defendant were
continuous and systematic; whether the
defendant availed himself of the benefits
and protections of the laws of the forum
state; and whether the defendant’s
activities in the state gave rise to the
cause of action. International Shoe Co.,
supra.
The Court later decided another
important jurisdictional case, World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286,
100 S.Ct. 559, 62 L.Ed.2d 490 (1980), basing
its analysis on International Shoe’s minimum
contacts test. In World-Wide Volkswagen,
the Court noted,
The concept of minimum contacts . . .
can be seen to perform two related, but
distinguishable, functions. It
protects the defendant against the
burdens of litigating in a distant or
inconvenient forum. And it acts to
ensure that the States, through their
courts, do not reach out beyond the
limits imposed on them by their status
as coequal sovereigns in a federal
system.
444 U.S. at 291-292, 100 S.Ct. at 564.
The Court, acknowledging that the
minimum contacts test was not dispositive of
jurisdiction, proposed additional factors
for courts to consider before exercising or
refusing to exercise personal jurisdiction.
These factors include the plaintiff’s
interest in obtaining relief, the state’s
interest in adjudicating the dispute, the
burden of the litigation on an out-of-state
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defendant, and most importantly, the
defendant’s ability to foresee being haled
into court in a given state.
These and other cases, while not
establishing a hard and fast rule, provide a
road map for judicial bodies, including
Kentucky courts, trying to determine the
reach of their personal jurisdiction.
Although this Court has not yet applied the
minimum contacts test in depth, the Kentucky
Court of Appeals has done so on numerous
occasions. Faced with the challenge of
reconciling so many factors and
considerations with the cases before it, the
Court of Appeals in Tube Turns Div. of
Chemetron Corp. v. Patterson Co., Inc.,
supra, adopted the three-part test
established previously by the Sixth Circuit
in Southern Machine Co. v. Mohasco Indus.,
Inc., 401 F.2d 374, 381 (6th Cir. 1968).
This test synthesized the relevant factors
set forth by International Shoe and its
progeny into a more succinct and workable
three-pronged analysis to determine the
outer limits of personal jurisdiction based
upon a single act. Since Tube Turns,
Kentucky courts have successfully applied
the same jurisdictional test. See Tennessee
Farmers Mutual Ins. Co. v. Harris, Ky.App.,
833 S.W.2d 850 (1992); Pierce v. Serafin,
Ky.App., 787 S.W.2d 705 (1990); Mohler v.
Dorado Wings, Inc., supra.
The first prong of the test asks
whether the defendant purposefully availed
himself of the privilege of acting within
the forum state or causing a consequence in
the forum state. The second prong considers
whether the cause of action arises from the
alleged in-state activities. The final
prong requires such connections to the state
as to make jurisdiction reasonable. Tube
Turns, supra, at 100. Each of these three
criteria represents a separate requirement,
and jurisdiction will lie only where all
three are satisfied. LAK, Inc. v. Deer
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Creek Enterprises, 885 F.2d 1293, 1303 (6th
Cir. 1989).3
Applying the three-pronged analysis to the specific
facts before it, the Wilson court concluded that Case’s one-time
“activities in Kentucky were short-lived, random and merely
incidental to his delivery assignment, and do not warrant the
exercise of jurisdiction,”4 that the “alleged negligent behavior
in Maryland did not arise from Case’s activities in Kentucky,”5
and that in light of his overall limited connection to Kentucky,
exercising jurisdiction over Case “would be unreasonable and
inconsistent with due process goals.”6
After determining that
Case lacked the minimum contacts with Kentucky which would
warrant the court’s exercise of jurisdiction over him, the court
also rejected the claim that it nevertheless should exercise
jurisdiction over Case in accordance with “‘traditional notions
of fair play and substantial justice.’”7
Concluding that due
process does not permit the “arbitrary assertion of power to
bind nonresident defendants with little or no connection to the
forum state,” the court held that its exercise of jurisdiction
3
Id. at 592-93.
4
Id. at 594-95.
5
Id. at 595.
6
Id. at 596.
7
Id. at 597 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316,
66 S.Ct. 154, 158, 90 L.Ed. 95 (1945)).
-8-
would “offend the ideals of fair play and substantial justice
and cannot stand under the 14th Amendment.”8
Here, in contrast to the single fleeting contacts with
Kentucky described in Wilson or in cases such as Tube Turns
Division of Chemetron Corp. v. Patterson Co., Inc.,9 Pierce v.
Serafin,10 and Franklin Roofing, Inc. v. Eagle Roofing and Sheet
Metal, Inc.,11 the record showed and Hull admitted that he has
done business in Kentucky since the 1980’s.
Further, the record
clearly supports the trial court’s conclusion that the first
prong of the test was met because
[a]side from his connection with Haddix,
Hull has regular and systematic contacts
with the state of Kentucky, through his work
on the installation of various pipelines.
At the time of his deposition, Hull appears
to have been engaged in an unrelated
construction project in Clinton County,
Kentucky. This Court concludes as a matter
8
Id. at 597.
9
562 S.W.2d 99 (Ky.App. 1978) (single sale of goods by Kentucky seller to
Colorado buyer, where goods were not specially manufactured, was insufficient
to support extension of long-arm jurisdiction over buyer).
10
787 S.W.2d 705 (Ky.App. 1990) (single letter sent by North Carolina
physician to Kentucky physician, which was the alleged tortfeasor’s only
connection with Kentucky, was insufficient to confer personal jurisdiction
over the North Carolina physician under Kentucky long-arm statute).
11
61 S.W.3d 239 (Ky.App. 2001) (single agreement by Kentucky roofing company
to work on a single project in Ohio, where representatives of the Ohio
company did not solicit business in Kentucky and never entered Kentucky for
any reasons related to the contract, was insufficient to support personal
jurisdiction against Ohio company under Kentucky’s long-arm statute).
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of law that Hull could reasonably anticipate
being haled into a Kentucky court as a
result of his activities in this state, and
that he has purposefully availed himself of
the privilege of performing construction
work in Kentucky.
This conclusion is consistent with Mohler v. Dorado Wings,
Inc.,12 in which this court found that sufficient minimum
contacts existed to support Kentucky long-arm jurisdiction where
the defendant airline’s Kentucky contacts occurred only “through
the contract with other airlines which allow[ed] their
[Kentucky] travel agencies to sell tickets aboard its carriers,
collect the fares, and transmit the fares – minus a commission –
to a settlement bank,” which in turn paid the airlines which
reimbursed the defendant airline.
Thus, the court did not err
by finding that the first prong of the test was satisfied.
The trial court next determined that the second prong
of the test was not met because although “construction of the
pipeline in question originated in Monroe County, Kentucky, the
vast majority of the acts and omissions complained of by Haddix
and Clearfork occurred in Tennessee,” with the result that
Hull’s Kentucky activities had “very little to do with his
alleged failure to reimburse Haddix and Clearfork.”
omitted.)
(Footnote
The record, however, shows that the job contract
described the job as constructing a “Gas Supply line &
12
675 S.W.2d 404, 405 (Ky.App. 1984).
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Distribution system” in “Monroe County, KY & Clay County, TN.”
Moreover, Hull admitted during his deposition that although the
project was undertaken to provide gas service to a Tennessee
location and “the majority of the work was in Tennessee,” the
“work began in Kentucky.”
Further, it was undisputed that the
job included tapping into an existing gas line located four
miles north of Gamaliel, Kentucky, and running the new line from
that point to a Tennessee location.
Contrary to the trial
court’s conclusion, it is clear that the work in Kentucky was an
integral part of the overall job which necessarily created more
than a passing contact with this state.
Given the evidence that
the claim arose in part from Hull’s Kentucky activities, we must
conclude that the trial court erred by finding that the second
prong of the test was not met.
Finally, we are not persuaded by the trial court’s
conclusion that the third prong of the test was not met.
Although the court concluded that Hull’s Tennessee activities
were the “primary” source of appellant’s claim, the question
before the court was whether Hull had such minimum contacts with
Kentucky as to make the exercise of jurisdiction in this state
reasonable, rather than whether jurisdiction would more
reasonably be exercised in one forum rather than in the other.
Given the evidence of work performed in Kentucky, coupled with
the absence of probative evidence to contradict appellant’s
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claim that many of the activities leading to the claim against
Hull occurred in Kentucky rather than in Tennessee, we must
conclude that the trial court erred by finding that there were
insufficient contacts to make jurisdiction in Kentucky
reasonable.
The trial court therefore erred by finding that the
third prong of the test was not met, and by dismissing the
action below for lack of personal jurisdiction over Hull.
The court’s judgment is vacated and remanded for
reinstatement of the action and further proceedings on the
claim.
ALL CONCUR.
BRIEF FOR APPELLANT CLEARFORK
CONSTRUCTION CO., INC:
Luther C. Conner, Jr.
Albany, Kentucky
BRIEF FOR APPELLEE:
Thomas E. Carroll
Monticello, Kentucky
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