Kustom Cycles, Inc. v. Bowyer - 2014 S.D. 87, 857 N.W.2d 401

Rule:

The Due Process Clause of the Fourteenth Amendment to the United States Constitution, U.S. Const. amend. XIV, forbids a state from asserting jurisdiction over a nonresident defendant when that defendant lacks sufficient contacts with the state, itself. Neither a nonresident defendant's contacts with a resident plaintiff, nor a resident plaintiff's contacts with the forum, can compensate for such a deficiency.

Facts:

Appellant, Clint Bowyer, was a resident of North Carolina. Kustom Cycles, Inc., owned by Brian Klock, was a South Dakota corporation operating in Mitchell, South Dakota. Klock and Bowyer first encountered each other in Daytona, Florida. Later that fall, the two again encountered one another at a NASCAR track in Phoenix, Arizona where they agreed that Kustom Cycles would customize a motorcycle for Bowyer. After several communications, Kustom Cycles delivered the motorcycle to Bowyer in North Carolina. Meanwhile, Bowyer provided a number of services to Kustom Cycles, after which, Kustom Cycles sent Bowyer a bill for the work in the amount of $30,788.45. Bowyer refused to pay the bill, insisting that Klock proposed—and Bowyer performed—compensation in the form of the promotions, endorsements, and special access to NASCAR events that Bowyer previously provided. Subsequently, Kustom Cycles filed a complaint against Bowyer in South Dakota for the payment of the bill. Bowyer moved the circuit court to dismiss for lack of personal jurisdiction. The circuit court ruled against Bowyer. Bowyer appealed. 

Issue:

Did Bowyer have sufficient minimum contacts to give South Dakota specific jurisdiction over him? 

Answer:

No.

Conclusion:

The court held that the motorcycle company did not meet its burden of establishing a prima facie case of personal jurisdiction over the customer, and the circuit court erred when it denied the customer's motion to dismiss for lack of personal jurisdiction. According to the court, the customer's minimum contacts did not amount to substantial activity, as the parties negotiated the oral contract at issue in Florida and Arizona, and the customer's agreement with the company did not create continuing obligations in South Dakota. Accordingly, the judgment was reversed.