Camelback Ski Corp. v. Behning

²⁷² McAULIFFE, Judge. We granted certiorari in this case to determine whether a Pennsylvania corporation operating a ski resort in that state had sufficient contacts with Maryland to justify this State’s exercise of “long arm” personal jurisdiction over it in a tort action that neither arose out of nor was directly related to the activities of the foreign corporation within this State. We hold it did not. Ralph Behning, a Maryland resident, suffered severe and permanent injuries in February, 1980, when he fell while skiing at Camelback, a ski resort owned and operated by Camelback Ski Corporation (Camelback) and located in the Poconos mountains of Pennsylvania.

In October, 1982, Behning and his wife sued Camelback 1 in the Circuit Court for Baltimore County, claiming damages for alleged negligence of Camelback in the design, construction, maintenance, and “grooming” of one of its ski slopes, and in the failure to correct, or give adequate warning of, an unreasonably dangerous condition on the land. Camelback was served with original process in Pennsylvania, and following an unsuccessful attempt to remove the action to the United States District Court for the District of Maryland, Camel-back filed a motion raising preliminary objection, seeking dismissal for lack of jurisdiction. 2 By its motion, Camel-back contended it had not regularly done or solicited business in Maryland, nor engaged in any other persistent course of conduct here, nor had any substantial contacts with this State. Thus, it argued, personal jurisdiction could not properly be asserted under Maryland’s long arm stat ²⁷³ ute, Maryland Code (1974, 1984 Repl.Vol., 1985 Cum.Supp.) §§ 6-101—6-103 of the Courts and Judicial Proceedings Article, or be consistent with the requirements of the Due Process Clause of the Fourteenth Amendment to the United States Constitution. The motion was considered by Judge James Sfekas on the pleadings, affidavits, discovery documents, and arguments of the parties.

Judge Sfekas found the existence of certain contacts between Camelback and this State, and initially determined that these contacts were sufficient to support jurisdiction. Upon reconsideration, however, he was persuaded that the contacts, while sufficient to satisfy the statutory requirement for long arm jurisdiction, were “insufficient to satisfy the requirements of due process where the injury or tortious act occurred] outside the state,” and he dismissed the action. The Behnings appealed and the Court of Special Appeals reversed, holding that the contacts found by the trial judge were sufficient to satisfy the requirements of due process. Behning v. Camelback Ski Corp., 61 Md.App. 11 , 484 A.2d 646 (1984).

The parties agree that under the facts of this case the applicable portion of the long arm statute is § 6-103(b)(4), which provides: (b) In general.—A court may exercise personal jurisdiction over a person, who directly or by an agent; (4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State[.] Appellees’ contention in this case is that Camelback “regularly does or solicits business ... in the state.” They do not suggest that Camelback engages in any other persistent course of conduct in Maryland, and they concede that ²⁷⁴ Camelback does not derive revenue from anything used or consumed in this State. This Court has consistently stated that the intent of the legislature in enacting Maryland’s long arm statute was to expand the exercise of personal jurisdiction to the limits allowed by the Due Process Clause of the Fourteenth Amendment to the Federal Constitution. Mohamed v. Michael, 279 Md. 653, 657 , 370 A.2d 551 (1977); Geelhoed v. Jensen, 277 Md. 220, 224 , 352 A.2d 818 (1976); Krashes v. White, 275 Md. 549, 558-59 , 341 A.2d 798 (1975); Lamprecht v. Piper Aircraft Corp., 262 Md. 126, 130 , 277 A.2d 272 (1971); Harris v. Arlen Properties, 256 Md. 185, 195-96 , 260 A.2d 22 (1969); Vitro Electronics v. Milgray, 255 Md. 498, 504-05 , 258 A.2d 749 (1969); Gilliam v. Moog Industries, 239 Md. 107, 111 , 210 A.2d 390 (1965); Marriott Corp. v. Village Realty & Inv., 58 Md.App. 145, 154 , 472 A.2d 510 (1984). We have held that the legislative purpose in the enactment of the long arm statute was, to a great degree, “the expansion of judicial jurisdiction up to but not beyond the outermost limits permitted in this area by the due process decisions of the Supreme Court.” Lamprecht v. Piper Aircraft Corp., supra, 262 Md. at 130 , 277 A.2d 272 .

The basic standard to be applied in determining whether this State may exercise personal jurisdiction over Camel-back is whether that corporation has “certain minimum contacts with [Maryland] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316 , 66 S.Ct. 154, 158 , 90 L.Ed. 95 (1945). As the Supreme Court acknowledged in Kulko v. California Superior Court, 436 U.S. 84, 92 , 98 S.Ct. 1690, 1696 , 56 L.Ed.2d 132 (1978), this standard is not susceptible of mechanical application, and the facts of each case must be weighed to determine whether the requisite “affiliating circumstances” are present: We recognize that this determination is one in which few answers will be written “in black and white. The ²⁷⁵ greys are dominant and even among them the shades are innumerable.” Kulko, supra, 436 U.S. at 92 , 98 S.Ct. at 1696 (citation omitted). Following its decision in International Shoe, the Supreme Court, in a series of cases, further developed the standards applicable to a state court’s exercise of personal jurisdiction.

In Perkins v. Benguet Mining Co., 342 U.S. 437 , 72 S.Ct. 413 , 96 L.Ed. 485 (1952), the Court considered the propriety of Ohio’s exercise of jurisdiction over a Philippine mining corporation in a suit brought by a nonresident of Ohio. The corporation had been carrying on a continuous and systematic, but limited, part of its general business in Ohio. The president of the corporation was served with summons in Ohio while he was engaged in corporate business there. The cause of action sued upon did not arise in Ohio and did not relate to the corporation’s activities there.

The Court held that the Fourteenth Amendment left Ohio free to take or decline jurisdiction over the corporation. Despite the fact that the cause of action in Perkins was not related to the corporation’s activities in Ohio, the Court noted that if a corporation carried on “continuous and systematic” corporate activities in a forum state, those activities would be sufficient to make it fair and reasonable to subject that corporation to proceedings in personam even though the cause of action was unrelated to the defendant’s activities in that state. 342 U.S. at 445-49 . The Court further expanded the flexibility of the doctrine of personal jurisdiction in McGee v. International Life Ins. Co., 355 U.S. 220 , 78 S.Ct. 199 , 2 L.Ed.2d 223 (1957).

In McGee , the Court ruled unanimously that the issuance and delivery of a single life insurance policy by a Texas insurance company to a California resident (who paid the premiums by mail) gave the California courts the power to exercise jurisdiction in a beneficiary’s suit for the policy proceeds. The Court noted that the trend of expanding the scope of state jurisdiction over foreign corporations and other nonresidents was “attributable to the fundamental transformation of our national economy over the years.” ²⁷⁶ 355 U.S. at 222 , 78 S.Ct. at 200 . Although the insurance company had never maintained an office or agent in California and there was no evidence to show that it had ever solicited or done any other insurance business in California, the Court stated that the elements of due process had been satisfied: It is sufficient for purposes of due process that the suit was based on a contract which had substantial connection with that State. The contract was delivered in California, the premiums were mailed from there and the insured was a resident of that State when he died.

It cannot be denied that California has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. Id. at 223 , 78 S.Ct. at 201 (citations omitted). Despite a clear emphasis in McGee that personal jurisdiction could be upheld on the basis of very minimal contacts with the forum state, the Court, later in the same term, demonstrated that there were limits beyond which due process could not be stretched. In Hanson v. Denckla, 357 U.S. 235 , 78 S.Ct. 1228 , 2 L.Ed.2d 1283 (1958), the Court overturned Florida’s exercise of jurisdiction over a Delaware bank.

The complex fact situation in Hanson concerned a Pennsylvania resident who executed a trust instrument in Delaware, naming a Delaware bank as trustee. The Pennsylvania resident reserved a power of appointment over the remainder of the trust for herself and subsequently moved to Florida and purportedly exercised her power of appointment over the trust while in Florida. Upon her death the residuary legatees of the will brought suit in Florida for the rights to the remainder of the trust. A sharply divided Supreme Court reversed a Florida court’s invalidation of the Delaware trust and its assertion of jurisdiction over the Delaware trustee, noting that the Delaware trustee did not have even those minimal contacts with Florida that were a prerequisite to a state’s exercise of power over a party.

Therefore, the Court concluded that jurisdiction over the trustee (an indispensable party to the action) had not been ²⁷⁷ obtained. While the Court in Hanson recognized the trend of expanding personal jurisdiction over nonresidents begun by the International Shoe case, it also emphasized a need for the exercise of restraint and said: [I]t is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts. Those restrictions are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States.

However minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the “minimal contacts” with that State that are a prerequisite to its exercise of power over him. 357 U.S. at 251 , 78 S.Ct. at 1238 (citations omitted). In applying the minimum contacts rule in Hanson , the Court noted that a defendant’s contact with a forum state would vary with the quality and nature of the defendant’s activity, and stated that: [I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws. 357 U.S. at 253 , 78 S.Ct. at 1239 (emphasis added) (citations omitted). Nearly twenty years passed before the Supreme Court again spoke in this area of the law. In Shaffer v. Heitner, 433 U.S. 186 , 97 S.Ct. 2569 , 53 L.Ed.2d 683 (1977), the Court held that assertions of in rem state-court jurisdiction must satisfy due process requirements in the same manner as assertions of in personam jurisdiction, and that the “central concern” must be on “the relationship among the defendant, the forum, and the litigation.” 433 U.S. at 204 , 97 S.Ct. at 2579 .

Shortly thereafter, the Court considered Kulko v. California Superior Court, supra, and World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 , 100 S.Ct. 559 , 62 ²⁷⁸ L.Ed.2d 490 (1980). In each case, the Court found the contacts between the defendant and the forum state to be insufficient to support the assumption of personal jurisdiction. In World-Wide Volkswagen the Court pointed out that the “minimum contacts” standard performs two related, but distinguishable functions. “It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to insure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.” Id. at 292, 100 S.Ct. at 564 .

Drawing from the earlier teachings of Hanson v. Denckla, supra, the Court said: Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment. Id. at 294 , 100 S.Ct. at 565 . More recently, the Supreme Court has addressed the issue of long arm jurisdiction in four cases: Keeton v. Hustler Magazine, Inc., 465 U.S. 770 , 104 S.Ct. 1473 , 79 L.Ed.2d 790 (1984); Colder v. Jones, 465 U.S. 783 , 104 S.Ct. 1482 , 79 L.Ed.2d 804 (1984); Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 , 104 S.Ct. 1868 , 80 L.Ed.2d 404 (1984); and Burger King Corp. v. Rudzewicz, 471 U.S. 462 , 105 S.Ct. 2174 , 85 L.Ed.2d 528 (1985). In Keeton , New Hampshire’s claim of personal jurisdiction over the publisher of Hustler magazine in a libel case was predicated upon a showing of sales activity within the state. 3 Noting that the contacts of Hustler Magazine, Inc. with New Hampshire were less than those shown to have ²⁷⁹ existed between the defendant corporation and the forum state in Perkins v. Benguet Mining Co., supra, and that Hustler’s “activities in the forum may not be so substantial as to support jurisdiction over a cause of action unrelated to those activities,” the Court nevertheless upheld jurisdiction because the cause of action arose out of the very activity that was being conducted, in part, in New Hampshire.

The concept of requiring more substantial contacts to support a claim of jurisdiction in a suit not arising out of or related to the defendant’s contacts with the forum (general jurisdiction) than in a suit that does arise out of or is related to those contacts (specific jurisdiction) was not a novel one. In Hanson v. Denckla, supra, 357 U.S. at 251 , 78 S.Ct. at 1238 , the Court made a similar comparison: The cause of action in this case is not one that arises out of an act done or transaction consummated in the forum State. In that respect, it differs from McGee v. International Life Ins. Co. ... and the cases there cited.

See also Brilmayer, How Contacts Count: Due Process Limitations on State Court Jurisdiction,