X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
No Refund Allowed Pat, a resident of State A, received a letter from Busco, a tour bus company that had been in business for about two months. Busco was incorporated and had its principal place of business in State B. The letter invited Pat to go on a tour of State C at a special introductory price. After Pat sent in her money, Busco sent Pat a tour brochure and ticket. Ed, also a resident of State A, saw an ad that Busco had placed once a week for the last several weeks in Ed’s hometown newspaper for the same State C tour. The ad listed a State A telephone number to call for tickets. Ed called the telephone number and ordered and bought a ticket for the same tour as Pat and for the same price. Pat and Ed boarded the tour bus in State B. Upon entering State C, the bus veered off the road and hit a tree. Ed was not hurt, but Pat suffered serious injuries. The tour was canceled. Busco refused to reimburse passengers the price of their tickets. Ed sued Busco for breach of contract in state court in State A to recover the price of his ticket. Busco moved to dismiss the suit based on lack of personal jurisdiction. The court denied the motion. After trial, judgment was entered in favor of Ed. Thereafter, Pat sued Busco in state court in State A for breach of contract to recover the price of her ticket and for tort damages for her personal injuries. After Busco filed its answer, Pat filed a motion for summary judgment on both claims on grounds of res judicata and collateral estoppel. The court denied Pat’s motion. State A has a long-arm statute that authorizes the exercise of personal jurisdiction over nonresident defendants on any basis not inconsistent with the Constitution of the United States. 1. Did the court rule correctly on Busco’s motion to dismiss Ed’s suit for lack of personal jurisdiction? Discuss. 2. Did the court rule correctly on Pat’s motion for summary judgment on each of her claims on grounds of res judicata and collateral estoppel? Discuss. This answer provided by Ann S. Lee, Emerson’s Tutorial Bar Review, www.emersonstutorialbarreview.com 1. ED v. BUSCO Personal Jurisdiction Personal jurisdiction is a court’s power over a defendant. Personal jurisdiction may be established in two ways: 1) traditional basis or 2) modern basis. Both require adequate notice. Traditional Basis The traditional basis for establishing personal jurisdiction requires the following: 1) consent; 2) presence when served; and 3) domicile. For purposes of personal jurisdiction, domicile is equivalent to a person’s citizenship in a state. Moreover, a corporation’s domicile is where it has its principal place of business and in the place of its incorporation. Here, Ed sued Busco for breach of contract in State A court. There are no facts to suggest that Busco consented or was present in State A when served. Moreover, Busco is a corporation that was incorporated and had its principal place of business in State B. Therefore, Busco is domiciled in State B. Thus, State A cannot reach Busco under the traditional basis. Modern Basis A state court may exert personal jurisdiction over a non-resident defendant through the modern basis. There are two ways of establishing personal jurisdiction under the modern basis: 1) systematic and continuous contacts; or 2) minimum contacts with the forum state. Both modern views require the application of a forum state’s long-arm statute. Long-Arm Statute: The facts state that State A has a long-arm statute that authorizes the exercise of personal jurisdiction over nonresident defendants on any basis not inconsistent with the Constitution of the United States. Therefore, the long-arm statute requirement is satisfied. Systematic and Continuous Contacts: If a non-resident defendant has had systematic and continuous contacts with the forum state, the forum state may exert personal jurisdiction. Not only may the forum state exercise personal jurisdiction over the non-resident defendant, but it also has general jurisdiction. This means that the non-resident defendant may be sued in the forum state for claims that are unrelated to the systematic and continuous contact. Here, the facts state that Busco had been in business for only about two months. This two-month time frame is too short to constitute an argument for a “continuous and systematic” contact with State A. Moreover, on these facts, Busco did not have facilities or personnel in State A. Therefore, under these facts, State A cannot exert personal jurisdiction over Busco based on systematic and continuous contacts. Minimum Contacts: Even though State A cannot exercise personal jurisdiction over Busco based on systematic and continuous contacts, it may, nonetheless, exercise personal jurisdiction based on minimum contacts. Personal jurisdiction based on minimum contacts requires: 1) purposeful availment; 2) nexus; 3) foreseeability; and 4) fair play. 1. Purposeful availment Purposeful availment requires some purposeful act intended to take advantage of the benefits or protection of the forum state. Here, Busco, a tour bus company, solicited business in State A by placing an ad in Ed’s hometown newspaper. Busco placed this ad once a week for the last several weeks. The ad listed a State A telephone number to purchase tickets. Ed called the local telephone number listed and purchased the ticket for the tour. In addition, the fact that the ad was placed in Ed’s hometown newspaper suggests that Busco specifically targeted State A residents, since hometown newspapers are usually distributed locally. By soliciting business from State A residents, Busco is purposefully doing business in State A. Busco is also obtaining substantial benefit from State A in the form of income. Therefore, Busco has purposefully availed itself of the benefits or protection of State A. 2. Nexus The cause of action must arise from the non-resident defendant’s contacts with the forum state. Here, Ed’s cause of action (breach of contract) arose from Busco’s contact with State A (selling tour tickets). Therefore, the nexus requirement is satisfied. 3. Foreseeability Foreseeability requires that a reasonable person, who engages in the minimum contacts, would expect to be required to defend a lawsuit in the forum state. Based on these facts, because Busco solicited business from State A (as outlined above), Busco would expect to defend a lawsuit in State A. 4. Fair Play To determine fair play, courts often look to the location of witnesses, location of the evidence, convenience of the parties, the forum state’s interest in providing a forum for its citizens, and to any other general fairness issues. Here, Ed is suing Busco for the breach of contract for not delivering on its promise for a State C tour. Busco placed an ad in State A and listed a State A telephone number. It is likely that a witness from the State A newspaper would be called to testify. Moreover, a witness from the telephone company that set up the State A local phone number may be called to testify. In addition, State A would have an interest in providing a forum for its citizen, namely, Ed. Lastly, Ed lives in State A. Hence, some of the witnesses, and one named party would be in State A. Therefore, it the fair play requirement is satisfied. Notice Defendants must have proper notice of the lawsuit. Under these facts, since Busco filed a motion to dismiss Ed’s claim, it is reasonable to assume that Busco had proper notice of Ed’s suit. Therefore, the notice requirement has been satisfied. Conclusion State A court may exert personal jurisdiction over Busco because: 1) Busco has had sufficient minimum contacts with State A; 2) State A has a long-arm statute; and 3) Busco has had proper notice. Therefore, the court correctly denied Busco’s motion to dismiss Ed’s suit for lack of personal jurisdiction. 2. PAT v. BUSCO After Ed’s case ended in a judgment against Busco, Pat sued Busco for a breach of contract and for tort damages for her personal injuries. Res Judicata Res judicata prohibits re-litigation between the same parties for causes of action arising from the same transaction or occurrence. Pat was not a party to the prior suit. Therefore, res judicata does not apply to both of Pat’s claims. Collateral Estoppel Collateral estoppel prevents the re-litigation of the same issues. Collateral estoppel requires two lawsuits and the following: 1) the first suit must have ended in a final, valid judgment on the merits; 2) the identical issue was actually litigated and determined; 3) the issue was essential to the judgment; and 4) collateral estoppel may be asserted only against someone who was a party (or in privity with a party) to the previous case. Here, Pat moved for summary judgment on both of her causes of action: breach of contract and her tort damages. In Ed v. Busco, tort damages were not litigated because Ed only sued Busco for the breach of contract. Therefore, Pat cannot use collateral estoppel as a basis for her summary judgment motion on her tort claim. On the other hand, Ed sued Busco for a breach of contract. The contract between Ed and Busco was for the same tour and for the same price as Pat. At Ed’s trial, the court found Busco had breached the contract. Therefore, Ed’s case ended in a final, valid judgment on the merits. Moreover, because Ed won his case, the issue of whether Busco breached the contract was essential to the judgment. Lastly, Busco was a party in the first case, Ed v. Busco, and Pat is using collateral estoppel against Busco. This is permitted under the law. Therefore, on the issue of breach of contract, Pat may assert collateral estoppel against Busco. The court correctly denied Pat’s motion with regards to her tort claims, but incorrectly denied it on her breach of contract claim against Busco.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.