Schuler v. Meschke

435 N.W.2d 156, 1989 Minn. App. LEXIS 134, 1989 WL 7761
CourtCourt of Appeals of Minnesota
DecidedFebruary 7, 1989
DocketC2-88-986
StatusPublished
Cited by16 cases

This text of 435 N.W.2d 156 (Schuler v. Meschke) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schuler v. Meschke, 435 N.W.2d 156, 1989 Minn. App. LEXIS 134, 1989 WL 7761 (Mich. Ct. App. 1989).

Opinion

OPINION

KALITOWSKI, Judge.

Appellants challenge the trial court’s denial of their motion to dismiss for lack of personal jurisdiction and for failure to state a claim for which relief can be granted. The trial court certified both questions as important and doubtful. We affirm in part and reverse in part.

FACTS

Respondents are a class of farmers who were members of American Energy, Inc. (AEI), a North Dakota cooperative. The farmers signed grower agreements to produce grain for AEI. The farmers come from North Dakota, South Dakota and Minnesota. Appellant Pringle and Herig-stad is a law firm with its offices in Minot, North Dakota. It has no offices in Minnesota and its attorneys are not licensed to practice law in Minnesota. Appellant Herbert Meschke, a member of the Pringle & Herigstad law firm, provided legal services for AEI.

AEI had approximately 1,100 members; respondents comprised the majority of AEI members. AEI was headquartered in North Dakota and organized with the intention of building and operating an alcohol production plant in North Dakota. It became necessary for AEI to obtain a precon-struction loan so it borrowed two and a half million dollars from Beneficial Finance Company. Beneficial required AEI to obtain from its members binding written commitments for annual deliveries of grain to the facility for processing. Beneficial also required AEI to purchase contract repudiation insurance, which it did from Industrial Indemnity.

AEI hired Meschke to prepare a written offering circular to be used to solicit grower agreements from farmers and other AEI members. As required by law, the offering circular was filed with state securities agencies in South Dakota, North Dakota and Minnesota. Meschke hired lawyers in South Dakota and Minnesota to give their opinions concerning certain securities law requirements in those states. The grower agreements were delivered to farmers in their own states, including Minnesota.

The project failed. The plant was never built and AEI filed Chapter 7 bankruptcy in North Dakota. AEI defaulted on the pre-construction loan and Beneficial required Industrial Indemnity to abide by the contract repudiation insurance policy. In re *159 turn for payment, Industrial Indemnity took an assignment of the grower agreements from Beneficial and commenced lawsuits in North Dakota Federal Court against all the farmers who had signed the agreements. The federal court upheld the validity of the agreements and ruled Industrial Indemnity could enforce the grower agreements even though no plant was built.

Respondents commenced an action claiming appellant Meschke made negligent misrepresentations or omissions in the offering circular, growers grain supply agreement and related documents. Respondents also claim Meschke breached alleged duties he had to respondents, and induced AEI to breach an alleged contract it had with respondents. Respondents seek indemnity from appellants for attorney fees and settlement payments in the lawsuits commenced by Industrial Indemnity.

The trial court denied appellants’ motions to dismiss for lack of personal jurisdiction and for failure to state a claim for which relief can be granted.

ISSUES

1. Did the trial court err in finding personal jurisdiction over appellants?

2. Did the trial court err when it found that respondents’ complaint states a cause action?

ANALYSIS

I. Personal Jurisdiction.

This court may assert personal jurisdiction over appellants only if respondents show appellants are subject to the applicable Minnesota long-arm statute, Minn.Stat. § 543.19 (1986) and that assertion of jurisdiction is consistent with the due process, or minimum contacts requirement of the United States Constitution. See Sherburne County Social Serv. o.b.o. Pouliot v. Kennedy, 426 N.W.2d 866, 867 (Minn.1988). This issue requires a two-step analysis; the constitutional analysis is not reached unless respondents first establish that the state long-arm criteria have been met. Id.

The Minnesota long-arm statute, Minn.Stat. § 543.19, was drafted in an effort to extend jurisdiction to the permissible limits allowed by constitutional due process. Vikse v. Flaby, 316 N.W.2d 276, 281 (Minn.1982). Under the relevant provisions of the long-arm statute a court may exercise personal jurisdiction over any foreign corporation or nonresident individual who:

commits any act outside Minnesota causing injury or property damage in Minnesota, subject to the following exceptions when no jurisdiction shall be found:
(1) Minnesota has no substantial interest in providing a forum; or
(2) the burden placed on the defendant by being brought under the state’s jurisdiction would violate fairness and substantial justice; or
(3) the cause of action lies in defamation or privacy.

Minn.Stat. § 543.19, subd. 1(d) (emphasis added).

The second exception represents a codification of the “minimum contacts” test. The question becomes: would the exercise of personal jurisdiction over the nonresident defendant offend due process. The United States Supreme Court has delineated the applicable constitutional standard of fundamental fairness as follows:

[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it 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) (citation omitted). The critical focus in any jurisdictional analysis is “the relationship among the defendant, the forum and the litigation.” West American Insurance Co. v. Westin, Inc., 337 N.W.2d 676, 679 (Minn.1983) (quoting Rush v. Savchuk, 444 U.S. 320, 327, 100 S.Ct. 571, 577, 62 L.Ed.2d 516 (1980)). This relationship is defined by the defendant’s contacts with *160 the forum state, not with its residents. West American, 337 N.W.2d at 679.

To determine whether minimum contacts exist between a nonresident defendant and the state, this court examines five factors: (1) the quantity of contacts with the state, (2) the nature and quality of those contacts, (3) the connection or relationship between the contacts and the cause of action, (4) the state’s interest in providing a forum, and (5) the relative convenience of the parties. Marquette Nat’l.

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Bluebook (online)
435 N.W.2d 156, 1989 Minn. App. LEXIS 134, 1989 WL 7761, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schuler-v-meschke-minnctapp-1989.