STANDARD TALLOW CORPORATION v. JOWDY

190 Conn. 48 (1983) | Cited 76 times | Supreme Court of Connecticut | May 3, 1983

This appeal by the plaintiff concernsthe dismissal of the plaintiff's action by the trial courton the ground of lack of jurisdiction over an out of statedefendant. The plaintiff, Standard Tallow Corporation,is a New Jersey corporation, authorized to do businessin this state. The defendants, James Jowdy and BahijHalaby,1 were personal guarantors of a series of twelvepromissory notes issued by Economat Supermarkets,Inc., a foreign corporation, and payable at a bank inNew York. When Economat Supermarkets, Inc.,defaulted on the notes, the plaintiff elected to exercisean acceleration clause therein and brought this actionto collect the amount due from the defendants.

The plaintiff obtained an order of prejudgmentremedy from the court, N. O'Neill, J., and real estatelocated in Danbury belonging to the defendant Halabywas attached by a deputy sheriff on February 25, 1980.Notice by mail was sent to Halaby in New York Statepursuant to an order of notice dated April 11, 1980.Halaby did own the real property attached, which wasunrelated to the plaintiff's cause of action, but he wasnot a Connecticut resident when the action wascommenced.

[190 Conn. 50]

On May 7, 1980, Halaby filed a motion to dismiss,claiming that the attachment of real property ownedby him was not sufficient to support the jurisdictionof the court over him. On June 10, 1980, the plaintifffiled a motion to postpone the hearing on Halaby'smotion until fourteen days after Halaby complied withthe plaintiff's discovery request, which was to be filedin the future. On June 13, 1980, the plaintiff filed a tenpage request for disclosure and production ofdocuments directed to establishing facts upon whichjurisdiction could be shown. Thereafter, on June 20,1980, Halaby filed an objection to the plaintiff's motionto postpone. Arguments on both the motion to dismissand the motion to postpone were heard on July 1, 1980by the court, Moraghan, J. At that time, the trial courtrefused the plaintiff's request for a trial-like hearing,but it did accept into evidence certain documentsindicating Halaby's ownership of real estate and alsoindicating his ownership in 1976 of a business in Connecticut.The court orally denied the motion to postponethe hearing, thereby in effect denying the plaintiff'srequest for disclosure and production. By an order andmemorandum of decision filed October 20, 1980, thecourt found that the plaintiff had based its assertionof jurisdiction solely on Halaby's ownership of realproperty located in Connecticut, that the plaintiff hadthe burden of proving jurisdiction, and that "the attachmentof real property, without more, is insufficient tosatisfy the minimum contacts standard required byShaffer [v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53L.Ed.2d 683 (1977)]" for the assertion of quasi in remjurisdiction. It therefore granted Halaby's motion todismiss and to dissolve the prejudgment attachmentof the defendant's property.2

[190 Conn. 51]

The plaintiff appealed the dismissal to this courtclaiming that the court erred (1) by placing the burdenon it to prove jurisdiction; (2) by denying it a trial-likehearing to determine contested issues of fact; (3) byrefusing to postpone any hearing on the jurisdictionalissue until the plaintiff could obtain discovery of factsto determine the extent of Halaby's contacts with thestate of Connecticut; and (4) by finding that Halaby hadinsufficient contacts with Connecticut to justify theexercise of quasi in rem jurisdiction over him.

We conclude that the trial court correctly placed theburden of proving jurisdiction on the plaintiff as theparty alleging quasi in rem jurisdiction, but that it erredin denying the plaintiff a trial-like hearing and indenying a continuance of the hearing to permitdiscovery on the issue of jurisdiction. Because the plaintiffwas prohibited from developing a factual record onthe question of Halaby's actual contacts in the trialcourt, it would be premature at this time to addressthe question of whether Halaby's contacts are sufficientfor the court to assert quasi in rem jurisdiction overhim.

I

BURDEN OF PROOF

The plaintiff's first claim is that the burden of proofshould be on a defendant who files a motion to dismissthereby contesting the court's jurisdiction over him,rather than on the plaintiff who asks the court toassume jurisdiction. "[A]ll assertions of state-courtjurisdiction must be evaluated according to the standardsset forth in International Shoe [Co. v. Washington,326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945)] andits progeny." Shaffer v. Heitner, 433 U.S. 186, 212, 97S.Ct. 2569, 53 L.Ed.2d 683 (1977); see Hodge v.Hodge, 178 Conn. 308, 318, 422 A.2d 280 (1979). Those

[190 Conn. 52]

     standards, as set out in International Shoe, require that"in order to subject a defendant to a judgment inpersonam, if he be not present within the territory ofthe forum, he have certain minimum contacts with itsuch that the maintenance of the suit does not offend`traditional notions of fair play and substantialjustice.'" (Emphasis in original.) International ShoeCo. v. Washington, supra, 316.

Whether sufficient minimum contacts exist for acourt to have jurisdiction is clearly dependent on thefacts of each particular case. "Like any standard thatrequires a determination of `reasonableness,' the`minimum contacts' test of International Shoe is notsusceptible of mechanical application; rather, the factsof each case must be weighed to determine whetherthe requisite `affiliating circumstances' are present.Hanson v. Denckla, 357 U.S. 235, 246 [78 S.Ct. 1228,2 L.Ed.2d 1283] (1958)." Kulko v. California SuperiorCourt, 436 U.S. 84, 92, 98 S.Ct. 1690, 56 L.Ed.2d132, reh. denied, 438 U.S. 908, 98 S.Ct. 3127, 57 L.Ed.2d1150 (1978).

In many cases jurisdiction is immediately evident, aswhere the sheriff's return shows abode service in Connecticut.When, however, the jurisdictional basis is notclear on the face of the record3 because service is hadunder the long-arm statutes,4 additional facts

[190 Conn. 53]

     establishing the "minimum contacts" required by dueprocess may need to be shown. It has not been the practicein this state to require these minimum contacts tobe made a part of the allegations in the complaint.Because a lack of personal jurisdiction may be waivedby the defendant,5 the rules of practice require thedefendant to challenge that jurisdiction by a motion todismiss. Practice Book 142, 143(2), 144. If thedefendant challenges the court's jurisdiction, it is thenincumbent on the plaintiff to prove the facts establishingthe requisite minimum contacts.

"The general rule putting the burden of proof on thedefendant as to jurisdictional issues raised is based onthe presumption of the truth of the matters stated inthe officer's return. When jurisdiction is based on personalor abode service, the matters stated in the return,if true, confer jurisdiction. When jurisdiction is basedon constructive service, jurisdiction cannot arise solelyfrom the acts recited in the return. There should beno presumption of the truth of the plaintiff's allegationof the additional facts necessary to confer jurisdiction."1 Stephenson, Conn. Civ. Proc. (2d Ed.) 96,p. 390. Placing the burden on the plaintiff to prove contestedfactual issues pertaining to jurisdiction is in

[190 Conn. 54]

     accord with rulings in other states which haveaddressed the same question. See Chavez v. Indiana,122 Ariz. App. 560, 596 P.2d 698 (1979); Pace CarpetMills v. Life Carpet & Tile Co., 365 So.2d 445 (Fla.App. 1978); Nelson v. Miller, 11 Ill.2d 378,143 N.E.2d 673 (1957); Mergenthaler Linotype v. Storch Enterprises,66 Ill. App.3d 789, 383 N.E.2d 1379 (1978);Krupnick v. Danin, 86 App. Div.2d 623, 446 N.Y.S.2d 357(1982); Lincoln v. Seawright, 104 Wis.2d 4,310 N.W.2d 596 (1981).

This court has recognized that the burden of proofis on the plaintiff to prove jurisdiction over the personwhen constructive service is used. In Chrysler CreditCorporation v. Fairfield Chrysler-Plymouth, Inc.,180 Conn. 223, 429 A.2d 478 (1980), the defendant, a NewYork resident, allegedly was served via a person allegedto be his agent in Connecticut, but was never personallyserved. He "moved to dismiss the complaint againsthim, alleging lack of personal jurisdiction over him.When this motion was heard, the plaintiff requestedand received a continuance to enable it to make anappropriate evidentiary showing." (Emphasis added.)Id., 224. When a motion to dismiss for lack of personaljurisdiction raises a factual question which is not determinablefrom the face of the record, the burden of proofis on the plaintiff to present evidence which will establishjurisdiction. The trial court correctly placed thisburden on the plaintiff.6

[190 Conn. 55]

II

TRIAL-LIKE HEARING; DISCOVERY

The plaintiff next claims that the trial court erredby denying it a trial-like hearing on the question ofjurisdiction. It further claims that the court erred bydenying it an opportunity to obtain discovery fromHalaby before a hearing was held.

The trial court denied without comment the plaintiff'smotion to postpone the hearing on Halaby'smotion to dismiss, and it proceeded immediately to hearargument on the motion to dismiss. The trial court ineffect ruled that an evidentiary hearing was necessarywhen it recognized that the minimum contacts test ofInternational Shoe Co. v. Washington, supra, shouldapply to the determination of jurisdiction and statedin its memorandum of decision that "the inquiry mustfocus on `the relationship among the defendant, theforum and the litigation.' Shaffer [v. Heitner], supra,204; Rush [v. Savchuk, 444 U.S. 320, 327, 100 S.Ct.571, 62 L.Ed.2d 516 (1980)]." The trial court didaccept into evidence five documents offered by theplaintiff to show contacts between Halaby and Connecticut,but this was only after the motion to postpone wasdenied and the plaintiff had properly excepted to theruling, claiming that it must be permitted to developevidence on the question of jurisdiction. It is unclearwhether the court considered that accepting the fivedocuments was the equivalent of an evidentiary hearing.No mention of the documents is made in the court'smemorandum of decision, which was decided solely onthe legal question of whether the defendant's ownershipof real property alone was enough to meet dueprocess requirements for asserting jurisdiction overhim.

[190 Conn. 56]

A

DENIAL OF AN EVIDENTIARY HEARING

As stated above, a determination of whether sufficientminimum contacts with Connecticut exist is a factquestion. Hulko v. California Superior Court, supra;Hanson v. Denckla, supra. "A motion to dismissmay . . . raise issues of fact and would, therefore,require a . . . hearing [to determine the facts]. .[A]ffidavits are insufficient to determine the factsunless, like the summary judgment, they disclose thatno genuine issue as to a material fact exists." 1Stephenson, Conn. Civ. Proc. (2d Ed. 1982 Sup.) 108dp. S 73. "`In almost every setting where importantdecisions turn on questions of fact, due process requiresan opportunity to confront and cross-examine adversewitnesses.' Goldberg v. Kelly [397 U.S. 254, 269, 90 S.Ct.1011, 25 L.Ed.2d 287 (1970)]." Society for Savingsv. Chestnut Estates, Inc., 176 Conn. 563, 574,409 A.2d 1020 (1979). When issues of fact are necessaryto the determination of a court's jurisdiction, due processrequires that a trial-like hearing be held, in whichan opportunity is provided to present evidence and tocross-examine adverse witnesses. The trial court erredin not holding such a hearing.

B

DENIAL OF DISCOVERY

The plaintiff also claims that the trial court abusedits discretion by denying the plaintiff's motion topostpone the hearing in order to give the plaintiff anopportunity for discovery in its attempt to prove therequisite minimum contacts between Halaby and Connecticut.The effect of the court's action was to precludeany meaningful evidentiary hearing on the jurisdictionalissue. As previously stated, such an evidentiary

[190 Conn. 57]

     hearing was required. The denial of the plaintiff'smotion for a continuance in effect denied discovery tothe plaintiff on an issue which the court clearly recognizedas requiring a resolution of contested fact.

"In any civil action . . . where the court finds it reasonablyprobable that evidence outside the record willbe required, a party may obtain . . . discovery ofinformation or disclosure, production and inspectionof papers, books or documents material to the subjectmatter involved in the pending action . . . and whichare within the knowledge, possession or power of theparty or person to whom the discovery is addressed.Discovery shall be permitted if the disclosure soughtwould be of assistance in the prosecution or defenseof the action and if it can be provided by the disclosingparty or person with substantially greater facility than itcould otherwise be obtained by the party seeking disclosure.. . ." Practice Book 218. Although 218speaks in terms of "any civil action" and of "the prosecutionor defense of the action, "it is clear that discoverymay be had to establish facts pertaining to personaljurisdiction. Chrysler Credit Corporation v. FairfieldChrysler-Plymouth, Inc., supra.7

The granting or denial of a discovery request restsin the sound discretion of the court. Kiessling v.Kiessling, 134 Conn. 564, 568, 59 A.2d 532 (1948). That

[190 Conn. 58]

     discretion is limited, however, by the provisions of therules pertaining to discovery; Practice Book217-221;8 especially the mandatory provision that

[190 Conn. 59]

     discovery "shall be permitted if the disclosure soughtwould be of assistance in the prosecution or defenseof the action. . . ." (Emphasis added.) Practice Book218. The court's discretion applies to decisions concerningwhether the information is material, privileged,substantially more available to the disclosing party, orwithin the disclosing party's knowledge, possession or

[190 Conn. 60]

     power, as stated in 218. A complete denial of discovery,however, is seldom within the court's discretionunless the court finds that one or more of the limitationson discovery expressed above applies. Denial ofa motion to postpone a hearing may, as here, effectivelypreclude any discovery. When discovery is warrantedunder the principles discussed above, such a denial isan abuse of discretion. Plouffe v. New York, N.H. &H.R. Co., 160 Conn. 482, 490-91, 280 A.2d 359 (1971).Here, where the trial court had already recognized thata factual presentation was necessary, it was an abuseof discretion to deny the plaintiff any opportunity fordiscovery.

There is error, the judgment dismissing the plaintiff'saction and dissolving the attachment of Halaby's propertyis set aside and the case is remanded for furtherproceedings not inconsistent with this opinion.

In this opinion the other judges concurred.

1. Although both defendants were served and both filed appearances,only Halaby is concerned in the issues on this appeal; only he appearedbefore this court.

2. Although there is no judgment file in this case, the trial courtdid file an order granting Halaby's motion to dismiss the action and todissolve the attachment. We treat this order as the judgment for purposesof this appeal.

3. Facts on the record for purposes of a motion to erase (nowincluded in a motion to dismiss, Practice Book 143) were those "where thenature of the action or amount in demand shows that the court has nojurisdiction, or where the officer's return shows invalid service, and thelike. . . ." Practice Book, 1963, 94.

4. Service in this case was under General Statutes (Rev. to 1979)52-68, which states: "Sec. 52-68. SERVICE OF PROCESS. ORDERS OF NOTICE. Theseveral , other than of probate, and the judges, clerks andassistant clerks thereof, may, except where it is otherwise speciallyprovided by law, make such order as is deemed reasonable, in regard to thenotice which shall be given of the institution or pendency of allcomplaints, writs of error and appeals from probate, which may be brought toor pending in the superior court, when the adverse party, or any persons sointerested therein that they ought to be made parties thereto, reside out ofthe state, or when the names or residences of any such persons in interestare unknown to the party instituting the proceeding. Such notice, havingbeen given and proved by the affidavit of the officer who served such noticeor by other competent evidence, shall be deemed sufficient service andnotice, and the court may proceed to a hearing, unless otherwise provided bylaw, or may order further notice as it deems reasonable." See also GeneralStatutes 52-59b.

5. Lack of jurisdiction over the person may be waived by consent;Ins. Corporation of Ireland v. Compagnie des Bauxites, 456 U.S. 694,703-704, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982); or by failure to file atimely challenge. Practice Book 144. A general appearance by itself,however, no longer necessarily constitutes waiver of jurisdictional defects.General Statutes 52-59b (b).

6. Murphy v. Dantowitz, 142 Conn. 320, 324, 114 A.2d 194 (1955),could be read to state that the burden of proof is on an out-of-statedefendant to show lack of quasi in rem jurisdiction. That case, however, wasdecided at a time when the application of the minimum contacts test toassertions of quasi in rem jurisdiction was still in doubt. See, e.g.,Pennoyer v. Neff 95 U.S. 714, 24 L.Ed. 565 (1575); Harris v. Balk,198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023 (1905); compare Shaffer v.Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). To theextent that Murphy v. Dantowitz, supra, may be read to conflict withthis opinion, it is overruled.

7. The contention of the defendant that to order discovery wouldimpermissibly impose the court's jurisdiction over the defendant "prior tohaving even made the determination as to whether the court in fact hadjurisdiction over this defendant," is erroneous. "A court must havejurisdiction to determine its own jurisdiction, especially where, as here,the defendants have by their appearance put that question into issue."Chrysler-Credit Corporation v. Fairfield Chrysler-Plymouth, Inc.,180 Conn. 223, 227, 429 A.2d 478 (1950). The court may even apply sanctionsfor failure to obey a discovery order intended to establish or to refutejurisdiction. Id.; accord Ins. Corporation of Ireland v. Compagnie desBauxites, 456 U.S. 694, 709, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1952).

8. "[Practice Book] Sec. 217. SCOPE OF DISCOVERY "Sec. 218. - IN GENERAL "In any civil action, in any probate appeal, or in any administrativeappeal where the court finds it reasonably probable that evidence outsidethe record will be required, a party may obtain in accordance with theprovisions of this chapter discovery of information or disclosure,production and inspection of papers, books or documents material to thesubject matter involved in the pending action, which are not privileged,whether the discovery or disclosure relates to the claim or defense of theparty seeking discovery or to the claim or defense of any other party, andwhich are within the knowledge, possession or power of the party or personto whom the discovery is addressed. Discovery shall be permitted if thedisclosure sought would be of assistance in the prosecution or defense ofthe action and if it can be provided by the disclosing party or person withsubstantially greater facility than it could otherwise be obtained by theparty seeking disclosure. It shall not be ground for objection that theinformation sought will be inadmissible at trial if the information soughtappears reasonably calculated to lead to the discovery of admissibleevidence." "Sec. 219. - MATERIALS PREPARED IN ANTICIPATION OF LITIGATION; STATEMENTS OF PARTIES "Subject to the provisions of Sec. 220, a party may obtain discovery ofdocuments and tangible things otherwise discoverable under Sec. 218 andprepared in anticipation of litigation or for trial by or for another partyor by or for that other party's representative only upon a showing thatthe party seeking discovery has substantial need of the materials in thepreparation of his case and that he is unable without undue hardship toobtain the substantial equivalent of the materials by other means. Inordering discovery of such materials when the required showing has beenmade, the court shall not order disclosure of the mental impressions,conclusions, opinions, or legal theories of an attorney or otherrepresentative of a party concerning the litigation. "A party may obtain, without the showing required under this section,discovery of his own statement and of any nonprivileged statement of anyother party concerning the action or its subject matter.""Sec. 220. - EXPERTS "Discovery of facts known and opinions held by experts, otherwisediscoverable under the provisions of Sec. 218 and acquired or developedin anticipation of litigation or for trial, may be obtained only as follows: "(A)(1) A party may through interrogatories require any other partyto identify each person whom the other party expects to call as an expertwitness at trial, to state the subject matter on which the expert isexpected to testify, and to state the substance of the facts and opinionsto which the expert is expected to testify and a summary of the grounds foreach opinion. (2) Upon motion, the court may order further discovery byother means, subject to such restrictions as to scope and such provisions,pursuant to paragraph (C) of this section, concerning fees and expenses asthe court may deem appropriate. "(B) A party may discover facts known or opinions held by an expert whohad been retained or specially employed by another party in anticipation oflitigation or preparation for trial and who is not expected to be called asa witness at trial only as provided in Sec. 229 or upon a showing ofexceptional circumstances under which it is impracticable for the partyseeking discovery to obtain facts or opinions on the same subject by othermeans. "(C) Unless manifest injustice would result, (1) the court shall requirethat the party seeking discovery pay the expert a reasonable fee for timespent in responding to discovery under paragraphs (A)(2) and (B) of thissection; and (2) with respect to discovery obtained under paragraph (A)(2) of this section the court may require, and with respect to discoveryobtained under paragraph (B) of this section the court shall require, theparty seeking discovery to pay the other party a fair portion of the feesand expenses reasonably incurred by the latter party in obtaining facts andopinions from the expert." "Sec. 221. - PROTECTIVE ORDER "Upon motion by a party from whom discovery is sought, and for goodcause shown, the court may make any order which justice requires to protecta party from annoyance, embarrassment, oppression, or undue burdenor expense, including one or more of the following: (1) that the discoverynot be had; (2) that the discovery may be had only on specified terms andconditions, including a designation of the time or place; (3) that thediscovery may be had only by a method of discovery other than that selectedby the party seeking discovery; (4) that certain matters not be inquiredinto, or that the scope of the discovery be limited to certain matters; (5)that discovery be conducted with no one present except persons designated bythe court; (6) that a deposition after being sealed be opened only by orderof the court; (7) that a trade secret or other confidential research,development, or commercial information not be disclosed or be disclosed onlyin a designated way; (5) that the parties simultaneously file specifieddocuments or information enclosed in sealed envelopes to be opened asdirected by the

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