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Harleysville Insurance Company v. Martin Construction

February 16, 2012

HARLEYSVILLE INSURANCE COMPANY, PLAINTIFF,
v.
MARTIN CONSTRUCTION, INC., KURT MARTIN, AND THE CITY OF WOLF POINT, MONTANA, DEFENDANTS.



The opinion of the court was delivered by: Daniel L. Hovland, District Court Judge United States District Court

ORDER GRANTING MOTION TO DISMISS CITY OF WOLF POINT, MONTANA, FOR LACK OF PERSONAL JURISDICTION

Before the Court is a Motion to Dismiss for Lack of Personal Jurisdiction filed by Defendant City of Wolf Point, Montana ("Wolf Point"), on August 1, 2011. For the reasons set forth below, the motion is granted.

I. BACKGROUND

Plaintiff Harleysville Insurance Company ("Harlesyville") is a Pennsylvania corporation licensed to do business in North Dakota. Its products are sold in North Dakota by local, independent insurance agents.

Defendant Martin Construction, Inc. is a North Dakota corporation with its principle place of business in Gladstone, North Dakota. Its owner, Kurt Martin, is a resident of Gladstone, North Dakota.*fn1 Beginning in approximately 2004, and continuing through approximately 2008, Martin Construction purchased commercial insurance containing various coverages and endorsements from Harleysville through American Insurance Company, Inc., a Dickinson, North Dakota, agency. Wolf Point is a municipality located in Roosevelt County, Montana. (Id. at ¶ 3). In June 2004, it contracted with Martin Construction to construct two aeration lagoons and a compressor station.

According to Wolf Point, the aeration system constructed by Martin Construction has never worked properly. In March 2010, it filed suit against Martin Construction in Montana's fifteenth judicial district court, asserting that Martin Construction had: (1) breached the parties' contract; (2) breached its duty of good faith and fair dealing; (3) breached an implied warranty of merchantability and implied warranty of fitness for a particular purpose; and (4) supplied non-conforming and defective goods. Martin Construction filed a counterclaim against Wolf Point as well as a third-party complaint against several of its subcontractors. The case was ultimately removed to the United States District Court for the District of Montana.

In January 2011, Harleysville initiated the above-entitled action, seeking a declaration from this Court that it is not contractually obligated to defend, pay damages on behalf of, or otherwise indemnify Martin Construction for the claims made by Wolf Point. It joined Wolf Point as a defendant.

On August 1, 2011, Wolf Point filed a Motion to Dismiss for Lack of Personal Jurisdiction with this Court. On August 22, 2011, Harleysville filed a response in opposition to Wolf Point's motion. On September 1, 2011, Wolf Point filed a reply in support of its motion. Consequently, the jurisdictional issue raised by Wolf Point has been fully briefed and the motion is ripe for the Court's consideration.

II. STANDARD OF REVIEW

"To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party need only make a prima facie showing of jurisdiction." Epps v. Stewart Information Services Corp., 327 F.3d 642, 647 (8th Cir. 2003) (citing Falkirk Min. Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 373 (8th Cir. 1990); Watlow Elec. Mfg. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir. 1988)). "The plaintiff's prima facie showing must be tested, not by the pleadings alone, but by the affidavits and exhibits presented with the motions and in opposition thereto." Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1072 (8th Cir. 2004). The party seeking to establish the court's in personam jurisdiction carries the burden of proof, and the burden does not shift to the party challenging jurisdiction. Epps, 327 F.3d 642, 647 (citations omitted).

III. LEGAL DISCUSSION

As a preliminary matter, it should be noted that this action is in federal court based on diversity jurisdiction. See 28 U.S.C. § 1332(a). Under Rule 4(k)(1)(A) of the Federal Rules of Civil Procedure, a federal district court in a diversity action will have personal jurisdiction over a non-resident defendant to the extent permissible under the law of the state in which the district court sits. Dean v. Oibas, 129 F.3d 1001, 1003 (8th Cir. 1997). Therefore, when a federal court sits in diversity, the analysis for personal jurisdiction involves two steps: (1) whether the forum state would accept jurisdiction under the facts of this case; and (2) whether the exercise of jurisdiction comports with constitutional due process restrictions. Lakin v. Prudential Securities, Inc., 348 F.3d 704, 706-07 (8th Cir. 2003) (citing Sondergard v. Miles, Inc., 985 F.2d 1389, 1392 (8th Cir. 1993)). To satisfy the first step of the jurisdictional analysis, the Court will address the relevant North Dakota provisions governing personal jurisdiction over non-resident defendants.

The jurisdiction of North Dakota courts is governed by Rule 4(b)(2) of the North Dakota Rules of Civil Procedure. The North Dakota Supreme Court has held that Rule 4(b)(2) "authorizes North Dakota courts to exercise jurisdiction over nonresident defendants to the fullest extent permitted by due process . . . ." Hansen v. Scott, 645 N.W.2d 223, 230 (N.D. 2003) (citing Auction Effertz, Ltd. v. Schecher, 611 N.W.2d 173 (N.D. 2000); Hust v. Northern Log, Inc., 297 N.W.2d 429, 431 (N.D. 1980)). Because Rule 4(b)(2) grants jurisdiction to the fullest extent permitted by the Constitution, the two-step test collapses into a single question of whether the exercise of personal jurisdiction comports with due process. Johnson v. Woodcock, 444 F.3d 953, 955 (8th Cir. 2006); Oriental Trading Co, Inc. v. Firetti, 236 F.3d 938, 943 (8th Cir. 2001); Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir. 1994); see Hansen v. Scott, 645 N.W.2d 223, 232 (N.D. 2002) (recognizing that a federal court sitting in diversity may collapse the two-step framework under North Dakota law).

"Due process requires minimum contacts between [a] non-resident defendant and the forum state such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1073 (8th Cir. 2004) (citing Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92 (1980)). There are two categories of minimum contacts with a state that may subject a defendant to jurisdiction in that forum, i.e., general and specific. With respect to general jurisdiction over a defendant, "a court may hear a lawsuit against a defendant who has 'continuous and systematic' contacts with the forum state, even if the injuries at issue in the lawsuit did not arise out of the defendant's activities directed at the forum." Dever, 380 F.3d 1070, 1073 (quoting ...


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