Klenz v. AVI 2002 SD 72
Annotate this CaseIvana Klenz, Individualy and as Mother and Special Administratrix of the Estate of Jan Wunderlich, a Deceased Minor
Plaintif and Appellant,
v.
AVI International
Defendant and Appellee.
[2002 SD 72]
South Dakota Supreme Court
Appeal from the Circuit Court of
The Fourth Judicial Circuit
Butte County, South Dakota
Hon. Warren G. Johnson, Judge
Robert L. Morris of
Day, Morris and Schreiber
Belle Fourche, South Dakota
Attorneys for plaintiff and appellant.
Gregory G. Strommen of
Costello, Porter, Hill Heisterkamp, Bushnell and Carpenter
Rapid City, South Dakota
Attorneys for defendant and appellee.
Argued March 28, 2002
Opinion Filed 6/19/2002
SABERS, Justice
[¶1.] Ivana Klenz commenced a lawsuit against AVI International (AVI) after it refused a demand for payment of legal expenses incurred in a wrongful death suit initiated by Klenz. AVI moved for summary judgment and the trial court granted the motion on the basis that 2) there was no personal jurisdiction over AVI. Klenz appeals. We reverse Issue 2), but affirm Issue 3) on the basis that there is no sufficient showing that the forum selection clause is invalid.
FACTSexchange student from Germany, was placed by AYUSA International in a host home in Newell, South Dakota. As a foreign exchange student in the AYUSA International program, Wunderlich was insured through AVI under the “Security Pass’Port” program, specifically Policy No. 290-682 AVI/AYU. Wunderlich received an AVI insurance identification card, identifying him as an insured participant. AVI obtained this insurance policy through Chubb Insurance of Europe, which was referred to as the insurer. AVI was denominated a broker, AYUSA International was denominated the policy holder and Jan Wunderlich was denominated the beneficiary.
year and provided worldwide coverage for medical/accident, dental, travel expense, death benefits, disability, third party liability and legal expenses. Specifically, with respect to legal expense coverage, the policy covered necessary and reasonable attorney and litigation expenses incurred by the insured as a plaintiff or defendant in a legal action. Coverage began when Wunderlich departed from Germany and would have ended when he returned to Germany.
[¶4.] On October 12, 1996, Wunderlich was killed in a car accident on Highway 79, near rural Newell, Butte County, South Dakota, while a passenger in a friend’s vehicle. On March 25, 1999, Klenz, Wunderlich’s mother, was appointed as special administratrix of his estate in Butte County. Klenz brought a wrongful death suit against the host family, the driver of the vehicle and AYUSA International. At the conclusion of the suit, Klenz demanded payment of legal expenses from AVI. AVI refused, causing Klenz to bring this action against AVI for legal expenses in Butte County.
[¶5.] AVI is a French corporation with its principal place of business in
France. It maintains a claims office at 26 Third Street, San Francisco, California, 94103. Klenz served AVI through its claims office in San Francisco with a summons and complaint on August 2, 2000. On January 16, 2001, AVI filed a motion to dismiss asserting lack of personal jurisdiction over AVI. Following a hearing on March 12, the trial court denied AVI’s motion to dismiss on March 16. AVI then filed a motion to reconsider and a hearing was held on April 12. At that meeting the parties agreed to convert the motion to dismiss into a motion for summary judgment, with the understanding that any order of summary judgment would be appealed to this Court. The trial court granted summary judgment in favor of AVI on May 8, 2001.
STANDARD OF REVIEW[¶6.] Our standard of review for summary judgment is well established and is “whether a genuine issue of material fact exists and whether the law was correctly applied.” Manuel v. Wilka, 2000 SD 61, ¶17, 610 NW2d 458, 462 (citing Parmely v. Hildebrand, 1999 SD 157, ¶7, 603 NW2d 713, 715-16 (citations omitted)).
[¶10.] 2. WHETHER THE TRIAL COURT ERRED IN GRANTING
SUMMARY JUDGMENT ON THE BASIS THAT IT
LACKED PERSONAL JURISDICTION OVER AVI.
[¶11.] AVI asserts that it lacked sufficient minimum contacts with South Dakota to subject it to personal jurisdiction. AVI argues that, because it is an insurance broker, and not an insurer, the trial court had no way of obtaining jurisdiction over it. Specifically, AVI contends that it could not have anticipated being haled into court in the state because it did not issue the insurance policy and merely found a company to underwrite the policy.
[¶12.] This Court has set out the principles for determining when circumstances provide sufficient contacts between a nonresident defendant and this state to support personal jurisdiction. These principles are well established.
First, the defendant must purposefully avail himself of the privilege of acting in the forum state, thus invoking the benefits and protections of its law. Second, the cause of the action must arise from defendant’s activities directed at the forum state. Finally, the acts of defendant must have substantial connection with the forum state to make the exercise of jurisdiction over defendant a reasonable one. An important factor bearing upon reasonableness of asserting jurisdiction is to determine if defendant’s conduct and connection with the forum state are such that he would have reasonably anticipated being brought into court there.
Miller v. Weber, 1996 SD 47, ¶8, 546 NW2d 865, 867 (quoting Opp v. Nieuwsma, 458 NW2d 352, 355-56 (SD 1990)).
[¶13.] While AVI may not be the primary insurer, it did issue the Security Pass’Port, which is an insurance policy. The Security Pass’Port information provided to the student as beneficiary includes: (1) an AVI insurance policy number; (2) an AVI International insurance I.D. card; (3) the address for the AVI Insurance Claim Service; (4) the events that trigger insurance coverage; and, (5) the limits of the AVI insurance policy coverage. And, as the issuer of this Security Pass’Port policy, AVI is a broker and a guarantor or insurer of the policy.
[¶14.] Personal jurisdiction may be obtained over a foreign defendant if the
plaintiff’s claim arises out of or relates to the defendant’s contacts with the forum. See Burger King Corp. v. Rudzewicz, 471 US 462, 472, 105 SCt 2174, 2181-82, 2185 LEd2d 528, 540-41 (1985). Furthermore, a single contact with the forum is sufficient if the plaintiff’s claim arises out of that contact. See McGee v. Int’l Life Ins. Co., 355 US 220, 223, 78 SCt 199, 201, 2 LEd2d 223, 226 (1957).
[¶15.] Wunderlich was a foreign exchange student in South Dakota. During
this time he was covered by the provisions of the Security Pass’Port. The accident in which he was killed occurred in South Dakota and the subsequent wrongful death suit was brought in South Dakota. The purpose of the insurance policy or Security Pass’Port policy issued by AVI is to provide worldwide coverage for the foreign exchange student while he/she is away from home. As the broker, guarantor, and insurer of the policy, AVI should have anticipated that it could be brought into court wherever the insured foreign exchange student resided or traveled.
KONENKAMP, Justice (concurring and concurring in result).
[¶34.] I concur with the majority on Issues One and Two. As to Issue Three, I concur in the result only: there should be no doubt that the forum-selection clause is enforceable, reasonable, and fair under the circumstances of this case. Unfortunately, the reasoning in the majority opinion clouds the issue, works an injustice to Klenz, and may work an injustice to future plaintiffs who find themselves in a similar position.
[¶35.] In the course of its discussion, the majority adopts the four-factor test, notes that, “[u]nder these factors, the forum selection clause may be reasonable,” and then proceeds to show that all four factors are (or at least seem to be) satisfied. There is no fifth factor in the precedents, yet the majority writing claims that “it remains difficult to determine whether the forum-selection clause is unfair or unreasonable under South Dakota law because of the undeveloped record and incomplete reasoning on the part of the trial court.” These pronouncements are entirely unwarranted. The record is no more developed than it is because the parties agreed that it need not be further developed; they themselves did not see the need to state the amount of litigation expenses involved or the identity of the party who is to receive payment from AVI or Chubb. After all, these facts have nothing to do with whether the forum selection clause is enforceable.
[¶36.] The law in this area is clear and ought not to be muddied with unnecessary dicta. In Bremen v. Zapata Off-Shore Co., 407 US 1, 92 SCt 1907, 32 LEd2d 513 (1972), the United States Supreme Court held that forum-selection clauses are “prima facie valid and should be enforced unless enforcement is shown by the resisting party to be 'unreasonable’ under the circumstances.” Id. at 10, 92 SCt at 1913, 32 LEd2d at 520. A forum-selection clause is “unreasonable” where a party can make a “strong showing” either that the forum thus selected is “so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court,” or that the clause was procured through “fraud or overreaching.” Id. at 15-18, 92 SCt at 1916-17, 32 LEd2d at 523-25. No showing — much less a “strong showing” — of these elements exists here. That there may not have been actual negotiations over the clause does not affect its validity. See Carnival Cruise Lines, Inc. v. Shute, 499 US 585, 593, 111 SCt 1522, 1527, 113 LEd2d 622, 632 (1991).
[¶37.] The majority’s reasoning on Issue Three is tantamount to punishing Klenz and her attorney for allowing the case to go to summary judgment: as if doing so ensured that the record would be undeveloped and the trial court’s reasoning incomplete. Indeed, the specific lesson taken from the majority’s opinion will be that no one in Klenz’s position should agree to proceed to summary judgment without first putting in the record every insubstantial detail possible, hoping that we might snatch some unessential fact to claim it empowers us to disregard settled law.
[¶38.] As the majority notes, Klenz brought this action in Butte County, South Dakota, against AVI, for “legal expenses.” In support of its assertion that “the undeveloped record and incomplete reasoning on the part of the trial court” cause it to be “difficult to determine whether the forum-selection clause is unfair or unreasonable under South Dakota law[,]” the majority provides two details. First, “[t]he record does not specify the litigation expenses being sought by Klenz as administratrix or the amount thereof”; second, the record does not “disclose whether the expenses incurred in the underlying wrongful death suit have been paid to trial counsel or whether Klenz is seeking reimbursement for litigation expenses already paid.” (As to the identity of the “other matters” that are supposedly “important factors to consider in determining the reasonableness and validity of the forum selection clause in this case[,]” the majority provides no hint.) Neither of these items can stand up to scrutiny.
[¶39.] On the first point, what possible difference could it make whether the amount Klenz seeks is $1 or $1,000,000? The absence of that fact, itself a target presumably moving upward as time passes, in the set of stipulated facts indicates that even the parties thought it irrelevant to the reasonableness of the choice-of-forum clause. Would we hold that if it were a substantial sum, then South Dakota is the right forum, but if not, let France decide?
[¶40.] As to the second point, again the proper question in this case is: as regards this action for attorney’s fees, is the forum selection clause unreasonable under South Dakota law? The majority invites us to consider two alternatives. First, suppose that there has been as yet no payment for attorney’s fees. In the first alternative, we must ask, who wishes to recover them? Klenz or her attorney? In either case, Klenz, the estate representative, is the ultimate beneficiary. Who will have to travel? If the case is litigated in France, perhaps her attorney and Klenz. The attorney will have expenses which, presumably, would be added to those he already claims and which, along with them, he would recover, if he prevails. If it is litigated in South Dakota, either an AVI or Chubb attorney will handle the case. This is a wash. One side is no more inconvenienced than the other. And since other things are equal, the forum selection clause should determine. Next suppose that Klenz has paid her attorney's fees and is seeking reimbursement from AVI or Chubb. We still have the same essential dispute: a case between two European parties seeking interpretation of a French contract under French law. The notion that such a case could be more properly adjudicated in South Dakota than in France beggars the imagination.*
[¶41.] The conclusion is inescapable that no material facts remain on which we need to make a decision. As the majority notes, the burden was on Klenz to show that the forum-selection clause is unreasonable. Regarding the four required elements, first, the law governing the formation and construction of the contract is the law of France, not the law of South Dakota. Second, both parties are residents of Europe, not South Dakota, and even if we factor in that Klenz’s counsel is a South Dakota resident, there is equal inconvenience to whichever party has to travel or, alternatively, to arrange for an attorney to argue in a distant forum. Third, the place of execution and performance of the contract was Europe, if not France; it was certainly not South Dakota. It is, of course, true that the attorney’s fees for which Klenz (or her lawyer) seek reimbursement were accumulated in South Dakota. But the fee agreement reached between Klenz and her attorney is not before us and, in any case, is entirely distinct from the contract between AVI-Chubb and Klenz-Wunderlich. Finally, the location of the parties and witnesses favors litigation in France. Both nominal parties are in Europe, and given the nature of the action, no more witnesses would be necessary than Klenz, her attorney, and representatives of Chubb. Travel inconvenience, if any, would be equal, though, perhaps, a Chubb representative’s desire to see South Dakota may be greater than the desire of Klenz’s attorney to see Paris. Alternatively, the inconvenience of finding an attorney to represent claims in a foreign forum would also be equal.
[¶42.] In summary, the issue is squarely before us and it is unfair to suggest that Klenz and her attorney somehow failed to provide undiscovered, unknown, and unimportant information. If the majority were correct in its assertion that there are material facts the discovery of which might have made the forum-selection clause unreasonable, then, as a matter of simple justice, Klenz should be given the opportunity to bring those facts to light. Thus, although I concur in the result, I cannot agree with the majority’s reason for coming to that result.
[¶43.] AMUNDSON, Justice, joins this special writing.
* Although South Dakota does have a significant interest in providing citizens with a forum in which to resolve disputes, that factor is not solely determinative. See Network Solutions, Inc., 38 SW3d at 203. Furthermore, Klenz is not a citizen of South Dakota and no evidence has been provided to support a contention that France does not provide an adequate forum in which to adjudicate this case. And I think it highly unlikely that any such evidence could be adduced.
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