Rocky Mountain Chipseal, LLC v. Sherman County

Citations: 841 F. Supp. 2d 1224; 2012 U.S. Dist. LEXIS 6241; 2012 WL 161826Docket: Civil Case No. 11-cv-02131-LTB

Court: District Court, D. Colorado; January 18, 2012; Federal District Court

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Defendant Sherman County, Kansas filed a Motion to Dismiss Plaintiff Rocky Mountain Chipseal, LLC's (RMC) complaint, asserting lack of personal jurisdiction and improper venue under Fed. R. Civ. P. 12(b)(2) and 12(b)(3). The court granted the motion regarding personal jurisdiction but denied as moot the venue issue. RMC, a Colorado LLC, proposed a contract to Sherman for chipsealing work in Kansas, which Sherman executed and faxed back to RMC. After RMC completed part of the work, Sherman canceled the remaining phase, prompting RMC to sue for breach of contract, unjust enrichment, and negligent misrepresentation in Colorado. Sherman removed the case to federal court based on diversity jurisdiction.

For personal jurisdiction, RMC must demonstrate the court's jurisdiction is valid under Colorado law and does not violate the Fourteenth Amendment's due process clause. The court highlighted that RMC bears the burden of proof, requiring only a prima facie case based on uncontroverted allegations. Personal jurisdiction in Colorado is governed by its long-arm statute, allowing jurisdiction over defendants conducting business within the state, interpreted to align with federal law. The key consideration is whether Sherman has sufficient "minimum contacts" with Colorado to justify jurisdiction, ensuring the defendant is not subjected to a court's authority without established ties to the forum.

Minimum contacts protect a defendant from defending a lawsuit in a distant forum where laws may differ significantly from their own. Specific jurisdiction exists if a nonresident defendant purposefully directs activities at the forum's residents, with the litigation arising from those activities. General jurisdiction can be established based on a defendant's continuous and systematic business contacts with the forum, but it requires a stricter standard. RMC claims personal jurisdiction over Sherman by arguing that serving its commissioner in Colorado suffices for jurisdiction, as established in Perkins v. Benguet Consol. Min. Co. and supported by O’Brien v. Eubanks. The court clarifies that personal service on an individual present in the forum can confer jurisdiction, but RMC must demonstrate jurisdiction over Sherman itself, not just Ms. Strnad. RMC's assumption that serving Strnad equates to serving Sherman is scrutinized. Additionally, the court references federal law regarding service of a county, which requires delivering the summons to the chief executive officer or following state law for serving such entities, emphasizing that "that state" refers to where the government entity is physically located.

The term "that state" refers to the state involved as a defendant or the state under which a municipal corporation was established. According to Kansas law, a plaintiff must serve specific county officials to serve a county, as outlined in Kan. Stat. Ann. 60-304(d)(1). Similarly, Colorado law allows service on a county through its commissioners. However, the context of Ms. Strnad's service in Colorado is critical; she was there for personal reasons, not in connection with her role as a county commissioner for Sherman. Sherman argues that it lacks minimum contacts with Colorado, asserting that Ms. Strnad’s presence does not equate to Sherman's presence in the state. The distinction between the presence of a natural person versus a corporation is emphasized, as a corporation's presence is defined by actions taken by authorized individuals on its behalf. Legal precedent indicates that serving a corporate officer in a forum state while they are there for unrelated personal reasons does not establish jurisdiction over the corporation if it lacks minimum contacts with the state. This principle is supported by various case law references. Consequently, since Sherman lacks both minimum and continuous contacts with Colorado, serving Ms. Strnad did not confer jurisdiction over Sherman, nor was Sherman personally served in accordance with Federal Rules of Civil Procedure 4.

RMC's complaint is dismissed due to lack of personal jurisdiction, as neither party contests the service issue in Kansas. The court distinguishes the case from Perkins, where the defendant had substantial business activities in Ohio and was served while engaged in corporate matters there. In contrast, no similar facts exist here, and transient service of a corporate officer does not establish jurisdiction. Additionally, municipal corporations cannot be subjected to federal jurisdiction outside their home state, which applies to Sherman, a Kansas entity. 

The court evaluates specific jurisdiction through a two-step process, first determining if Sherman had sufficient contacts with Colorado to anticipate being sued there. Sherman's contacts do not meet the standard, as the evidence suggests RMC initiated contact, including a proposal delivered in Kansas. RMC's claims that Sherman actively solicited work in Colorado are contradicted by its own assertions and supporting affidavits, leading the court to reject the notion of purposeful availment by Sherman. Consequently, the court does not proceed to the second inquiry regarding fair play and substantial justice.

Sherman lacks minimum contacts with Colorado, as established by precedent. RMC's claims of phone calls and payments do not suffice to demonstrate these contacts, as they were neither voluminous nor significant enough, and a contract alone does not establish minimum contacts. Further, no prior negotiations are cited, and the relationship was short-term, with all contract work performed in Kansas. Additionally, no representatives from Sherman traveled to Colorado for discussions with RMC, contrasting with cases where significant interactions occurred. Sherman asserts no connections to Colorado beyond the contract, with no offices or ongoing obligations in the state. Thus, RMC's reliance on the contract is insufficient for establishing personal jurisdiction. 

The analysis also indicates that RMC failed to meet the high burden required for proving general jurisdiction, as it did not present facts showing continuous and systematic business contacts with Colorado. RMC's lack of response regarding general jurisdiction implies acknowledgment of this deficiency. Consequently, the court concludes it lacks jurisdiction over Sherman, granting the motion to dismiss RMC's complaint for lack of personal jurisdiction and denying the venue argument as moot. Costs are awarded to Sherman.