Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc.

559 N.E.2d 477, 53 Ohio St. 3d 73, 1990 Ohio LEXIS 338
CourtOhio Supreme Court
DecidedAugust 8, 1990
DocketNo. 89-1337
StatusPublished
Cited by208 cases

This text of 559 N.E.2d 477 (Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc.) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc., 559 N.E.2d 477, 53 Ohio St. 3d 73, 1990 Ohio LEXIS 338 (Ohio 1990).

Opinion

Douglas, J.

Pursuant to Civ. R. 12(B)(2), Mitchell’s moved to dismiss appellant’s complaint for lack of personal jurisdiction. The trial court, on that basis, dismissed the complaint and the court of appeals affirmed. Thus, we must first decide whether Mitchell’s conduct falls within Ohio’s “long-arm statute” or applicable civil rule, and if the statute or civil rule confers personal jurisdiction, then we must determine whether granting jurisdiction comports with the Due Process Clause of the Fourteenth Amendment to the United States Constitution. See Fallang v. Hickey (1988), 40 Ohio St. 3d 106, 532 N.E. 2d 117.

I

In this appeal, personal jurisdiction over a nonresident defendant is governed by R.C. 2307.382, which states in relevant part:

“(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person’s:

“(1) Transacting any business in this state;

* *

“(C) When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him.” (Emphasis added.)

Likewise, the applicable civil rule is Civ. R. 4.3(A)(1), which authorizes out-of-state service of process on a defendant who is “* * * [transacting any business in this state[.]” Mitchell’s argues that, pursuant to Section 5(B), Article IV.of the Ohio Constitution,1 Civ. R. 4.3(A)(1) supersedes R.C. 2307.382(A)(1). We disagree and find that the statute and civil rule are consistent and in fact complement each other. R.C. 2307.382(A)(1) authorizes a court to exercise personal jurisdiction over a nonresident defendant, whereas Civ. R. 4.3(A)(1) provides for service of process to effectuate that jurisdiction. Both require that the nonresident defendant be “transacting any business” in Ohio.

Appellant asserts that the negotiations prior to the signing of the lease, and the subsequent duties and obligations created by the agreement, are sufficient to establish that Mitchell’s is transacting business in Ohio. Mitchell’s, on the other hand, contends that because the physical location of the leased storeroom is in Kentucky, it is Kentucky, not Ohio, where all business is transacted. We again disagree.

It is clear that R.C. 2307.382(A)(1) and Civ. R. 4.3(A)(1) are very broadly worded and permit jurisdiction over nonresident defendants who are transacting any business in Ohio. “Transact,” as defined by Black’s Law Dictionary (5 Ed. 1979) 1341, “* * * means to prosecute negotiations', to carry on business; to have dealings * * *. The word embraces in its meaning the carrying on or prosecution of business negotiations but it is a broader term than the word ‘contract’ and may involve business negotiations which have been either wholly or partly brought to a conclusion * * (Emphasis added.)

In the case at bar, Mitchell’s negotiated the lease by telephone contact to Ohio with an Ohio-based limited [76]*76partnership. Mitchell’s intentionally and voluntarily entered into a ten-year contract by signing the document in Georgia and mailing it to Ohio. The document creates ongoing duties and obligations for the life of the contract. Undoubtedly, both parties sought the benefit of each other’s bargain in hopes of realizing a pecuniary gain. The fact that Mitchell’s maintained no physical presence in Ohio does not preclude a finding that it transacted business in this state.

Thus, we are convinced that Mitchell’s conduct falls unequivocally within the plain and broad language of R.C. 2307.382(A)(1) and Civ. R. 4.3(A)(1). Similarly, our finding is reinforced by the fact other courts have passed on this issue reaching the same result, to-wit: that a lease agreement, in certain circumstances, is “transacting business” within the forum state’s long-arm statute. See, e.g., Wright Internatl. Express, Inc. v. Roger Dean Chevrolet, Inc. (S.D. Ohio 1988), 689 F. Supp. 788; Vena v. Western General Agency, Inc. (N.D. Ill. 1982), 543 F. Supp. 779; Klippel v. Heintz (1982), 231 Kan. 312, 644 P. 2d 428; Schanno Transp., Inc. v. Smith (Minn. 1981), 312 N.W. 2d 114; SD Leasing, Inc. v. Al Spain & Assoc., Inc. (1982), 277 Ark. 178, 640 S.W. 2d 451.

Accordingly, we hold that a commercial nonresident lessee, for purposes of personal jurisdiction, is “transacting any business” within the plain and common meaning of the phrase, where the lessee negotiates, and through the course of dealing becomes obligated, to make payments to its lessor in Ohio.

II

Once having decided that the conduct of Mitchell’s falls within the purview of R.C. 2307.382(A)(1) and Civ. R. 4.3(A)(1), the question becomes whether the assertion of personal jurisdiction by an Ohio court over Mitchell’s comports with the Due Process Clause of the Fourteenth Amendment.

Over forty years ago, in International Shoe Co. v. Washington (1945), 326 U.S. 310, the court announced that a state may assert personal jurisdiction over a nonresident defendant if the nonresident has “* * * certain minimum contacts with it such that maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” (Citation omitted.) Id. at 316. Since 1945, the court, on numerous occasions, has elected to address the Due Process Clause as it pertains to personal jurisdiction over a nonresident defendant. In particular, for purposes of this appeal, we turn our attention to Burger King Corp. v. Rudzewicz (1985), 471 U.S. 462, which involved a contract dispute substantially similar to the issue presented before us today.

In Burger King, Rudzewicz, a franchisee residing in Michigan, was sued in Florida by Burger King, a Florida-based corporation, for breach of contract and trademark infringement. The contract was negotiated with both the Florida-based headquarters of Burger King and its Michigan district office. The twenty-year lease provided that the relationship would be governed by Florida law and it required that all monthly fees and relevant notices be sent to the Florida headquarters. The court ruled that the assertion of jurisdiction did not offend due process and stated:

“* * * Rudzewicz established a substantial and continuing relationship with Burger King’s Miami headquarters, received fair notice from the contract documents and the course of dealing that he might be subject to suit in Florida, and has failed to demonstrate how jurisdiction in that [77]*77forum would otherwise be fundamentally unfair * * Id. at 487.

Justice Brennan, in writing for the majority of the court, reviewed prior cases and concluded that “* * * the constitutional touchstone remains whether the defendant purposefully established ‘minimum contacts’ in the forum State. International Shoe Co. v. Washington, supra, at 316.” (Emphasis added.) Id. at 474. The nonresident defendant has purposefully established minimum contacts “* * * where the contacts proximately result from actions by the defendant himself

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Bluebook (online)
559 N.E.2d 477, 53 Ohio St. 3d 73, 1990 Ohio LEXIS 338, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kentucky-oaks-mall-co-v-mitchells-formal-wear-inc-ohio-1990.