Petition for Writ of Certiorari — First National National Bank of of Ames, Iowa v. Innovative Clinical and Consulting Services, LLC (No. 06-900)

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a Supreme Court. U.S.

PTL eB

06-900 0c 27 2006

IN THE

Supreme Court of the Anited States

FIRST NATIONAL BANK OF AMES, IOWA,

Petitioner,

Vv.

INNOVATIVE CLINICAL AND CONSULTING SERVICES, LLC

d/b/a TOCO HILLS URGENT CARE,

Respondent.

On Petition for Writ of Certiorari To The

Georgia Court of Appeals

PETITION FOR WRIT OF CERTIORARI

WILLIAM V. CUSTER, IV

Counsel of Record

JENNIFER B. DEMPSEY

ADWOA W.D. GHARTEY- TAGOE

POWELL GOLDSTEIN LLP

One Atlantic Center

1201 West Peachtree St.. N.W.

Atlanta, Georgia 30309-3488

(404) 5372-6600

Counsel for Petitioner

First National Bank of Ames. lowa

QUESTION PRESENTED FOR REVIEW

May a forum state exercise personal jurisdiction over a non-

\ resident defendant whose contacts with the forum state are

insubstantial and do not “arise out of a relate to” the

plaintiff's cause of action?

TABLE OF CONTENTS

QUES TIS Fae eet a ee atitardbtesreebiciniviesecsesecrsoreesesavescecoose

TALS OF PERF Fae I haiti trsvscesesnenssigeseveesececesecess lil

I. THE COURT SHOULD RESOLVE A

CONFLICT AMONG THE CIRCUITS

AND STATES AS TO WHEN A CAUSE

OF ACTION ARISES OUT OF OR

RELATES TO ACTIVITIES IN THE

FORUM STATE FOR THE PURPOSE OF

ASSERTING ‘SPECIFIC’ IN PERSONAM

Pr ee GR tielctbsiedsehati ces sivecenssincesconseceoees

A. The Due Process Clause of the

Fourteenth Amendment Requires

Certain Minimum Contacts to Support

Long-Arm Jurisdiction. ...............:scccsessesesseeess

B. There Is a Serious Division of

Authority Among State and Federal

Courts Regarding the Interpretation of

the Phrase “Arise Out of or Relate To” .........

c. This Is An Appropriate Case For Resolving

The Question Presented,........................

i ciesneceonecescers 20

Fag ie hn) 2 i, Giant SOEs" O28 A la

ill

TABLE OF AUTHORITIES

Page(s)

CASES

Addy v. Club Med., No. 95-0035, 1997 WL 30205 ?

CEA, ER PO: SOE DIOIY vccrscsesiccccicicesepanivniceneeanobanncien 10

Asahi Metal Indus., Co. v. Superior Court, 480 U.S.

CAE COPIED sicvsdicnonisiiuissnokenspencisicetocsieeaseacionictiatpaminianetiel 11

ALS Scan, Inc. v. Digital Service Consultants, Inc.,

Sa De FOE CE OR, TID civis devterkicnshulecnincactsanirdaonts 17

Bertke v. Cartledge, 597 F. Supp. 68 (D.C. Ga.

eg) TN DIOS TR DEAL D So MOONS Ae, ORIN eT NEED {3

Beverly Kuenzle v. HTM Sport-Und Freizeitgerate

AG, 102 F.3d 453 (10th Cir. 1996) ........0000.c.ccsecceseesees 16

Bird v. Parsons, 289 F.3d 865 (6th Cir. 2002) ................. 15

Breckenridge Pharmaceutical, Inc. v. Metabolite

Laboratories, Inc., 444 F.3d 1361 (11th Cir.

ID i cesocosicivceceusdindeaabinalatd states ea duikcspinpoalis atatmbanabdce en 10

Burger King Corp. v. Rudzewicz, 471 U.S. 462

CB TEED cnsvcvsdarenetenieumeickesdbushiamibcees tacdsvemmoiginasil 8, 10, 11, 12

Burnham v. Superior Court, 495 U.S. 604 (1990) ............. 8

Carnival Cruise Line v. Shute, 499 U.S. 585

CRIED: sicis\cincasets casctvcracsseabattaeea maccaaouitneiclantnnadtes 7, 8,9

Chew v. Dietrich, 143 F.3d 24 (2d Cir. 1998) .......00000... 17

Christian Science Bd. of Directors of First Church of

Christ, Scientist v. Nolan, 259 F.3d 209 (4th Cir.

|} anne Reena SON NITIES FO a cle Kae CPE An aE OBER li

Davis v. Baylor University, 976 S.W.2d 5 (Mo. App.

WEEE, FE ckcsnsccdivkblnhinaindussuiecsetteceeaaataincn Memagines. 17

Deluxe Ice Cream Co. v. R.C.H. Tool Corp.; 726

Fe VSe ER, TO titties 15,19

Doe v. Unocal Corp., 248 F.3d 915 (9th Cir. 2001) ........ id

First Mortgage Corp. v. State Street Bank and Trust

Co., 173 F. Supp. 2d 1167 (D. Utah 2001) ........000000.. 16

Fowler Prods. Co., Inc. v. Coca-Cola Bottling Co. of

Tulsa, Inc., 413 F. Supp. 1339 (D.C. Ga. 1976) .......... 10

Hanson v. Denckla, 357 U.S. 235 (1958) .......00.. 12, 13, 20

Helicopteros Nacionales De Colombia, S.A. v. Hall,

A ee FE ERED eiket pac mnicinciplncsoininesinetelenss 7, 8, 11, 13

International Shoe, Co. v. Washington, 326 U.S. 310

ee desilaac baesicd itcaenevenisesebnimeraianaiocboans 8, 10, 12, 19

Kervin v. Red River Ski Area, Inc., 711 F. Supp.

Ee ts BG SIU E citendidenchiaaithaucninceemianisclippttiieniaioas 14

Luna v. Compania Panamena De Aviacion, S.A., 851

F. Supp. $26.(S.D. Tex. 1994) ......cccsicccccsopcecsnnsvees 14, 16

Marino v. Hyatt Corp., 793 F.2d 427 (1st Cir. 1986) ...... 16

Marten v. Silva 200 S.W.3d 297 (Tex. Ct. App.

I Sch hiacphstabins a lndvtiar i stance hal latindneithidas maha cpdeetouciebidins 18

Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93 (3rd

ii dasdichciseccgndavidvabieishdiniscdsdandesopiaderatiauaiss 15

Nowak v. Tak How Investments, Ltd., 94 F.3d 708

al Serica decesrnaisead atemngine Gitcndipdcnatasiess 15

In re Oil Spill by Amoco Cadiz Off Coast of France,

699 F.2d 909 (7th Cir. 1983), cert. denied, 464

RP ae ME NED sects scicsciaaascistcbleeaatslosbo iaiesalemncnrchomaaiigs 15

Pearrow v. National Life and Acc. Ins. Co., 703 F.2d

ET CIs PD isd ii bwitteccessn tac ses Aiheatdirssicle tn pocgeceoes 15

Perkins v. Benguet Consol. Mining Co., 342 US.

EME isdarsiensttvnescchastd ahve acstee tatiana msec seupstamemeabaloned 8, 11

Pizarro v. Hoteles Concorde Int'l, 907 F.2d 1256

PE FE iii e da ndedecbictanieanoniteehabideet dudes 16

Prejean v. Stonatrach, Inc., 652 F.2d 1260 (Sth Cir.

he 5) eat ere Rea Bes acae ne Rp re eR oT CIE TIT Oe MOE 14

Railcar Ltd. v. Southern Illinois Railcar Co., 42 F.

Supp. 2d 1369 (N.D. Ga 1999) ...............cessecrereseee i0, 11

Rambo v. American So. Ins. Co., 839 F.2d 1415

GE I ee 11

Republic Credit Corp. I v. Rance, 172 F. Supp. 2d

CEFR, FESS 1: FONG Biases ccersivincerdsasiecsecseeciveiies 12

Sawtelle v. Farrell 70 F.3d 1381 (1st Cir. 1995) .......... ae

Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 at

n. 14, 94 S.C. FOGG, ZAST C1ST4) wicccisccctiscsccscccstecnssine 12

Shaffer v. Heitner, 433 U.S. 186 (1977) ‘uc. ceeeeeeeeeeeeees 7,8

Shoppers Food Warehouse v. Moreno, 746 A.2d 320

Bo BNE iia dancccuiessncs ecsvoundninbiaivcinendcaevassdecantpiarcitinioe 17

Shute v. Carnival Cruise Lines, 897 F.2d 377 (9th

Cir. 1990), rev'd on other grounds, 499 U.S. 585

EIIPIE © ciesin dncdpbeigaicsicsouosenouionted sdanaitiascoaecstyateineh 14,19

State of S.C. v. Reeves, 423 §.E.2d 32 (Ga. Ct. App.

OIG Sistkcdintocsttecnslisccasardestedlgvonsassiouanerstivasstiauenaaaren 18

Static Control Components, Inc. v. Intersolution

Ventures Ltd., No. 1:05CV004017, 2006 WL

2042900 (M.D. N.C. July 17, 2006)... eceeeeeees 17

Ticketmaster-N_Y., Inc. v. Alioto, 26 F.3d 201 (lst

Oe NN ae a crcsssenedacancines sieea om 8

United States v. Swiss American Bank, Ltd., 274

FP Re 6, BN kb eis tasserenesine in toapaasnstbnntncctes 11

Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534

Re AE sacle res cssechaeatucci ip iuosmesonnnielecrtiatawens 11

Vons. Cos. v. Seabest Foods, Inc., 926 P.2d 1085

(Cal. 1996), cert. denied, 522 U.S. 808 (1997) ........... 17

White v. Roberts, 454 S.E.2d 584 (Ga. Ct. App.

DY Site cies inter aidevos tas curenemecesaeradehmsavteeaae ke 18

Woods Intern., Inc. v. McRoy, 436 F. Supp. 2d 744

RN: SE, MMMOND sus kus oe coiececicicdnds acnuubeeaneedanbaulantanigiasins 17

World-Wide Volkswagen Corp. v. Woodson, 444

Oe re CE citadel 12

LAWS

i SOT. MIE, FAY, OE hc circcciijncndadean passim

RC ASA. OTE GOOD crccvedescccevacsseccscassindNisaconsl passim

SECONDARY SOURCES

Lea Brilmayer, How Contacts Count: Due Process

Limitations on State Court Jurisdiction, 1980

Ny Sta BONY FF LP OMNE DY denltlacisisivencisitanniechtinie\cicemsiunoaiohinié 16

Lea Brilmayer, et al., A General Look at General

Jurisdiction, 66 Tex. L. Rev. 721 (1988)... 9

Lea Brilmayer, Related Contacts and Personal

Jurisdiction, 101 Harv. L. Rev. 1444 (1988) .......... 9, 16

Lawrence W. Moore, 7he Relatedness Problem In

Specific Jurisdiction, 37 \daho L. Rev. 583 (2001) ....... 9

William M. Richman, Review Essay, Part 1 Casad's

Jurisdiction in Civil Actions; Part II A Sliding

Scale to Supplement the Distinction Between

General and Specific Jurisdiction, 72 Cal. L. Rev.

De 5 SRR Ea ASR ecre ee eieret aa aaah owt ie OMe A er MEN: 9

Flavio Rose, Comment, Related Contacts and

Personal Jurisdiction: The "But For" Test, 82

ee Oe eR cakiendesiaiccaicansnrcioesiaparemncmcena 14

Linda Sandstrom Simard, Hybrid Personal

Jurisdiction: It’s Not General Jurisdiction, or

Specific Jurisdiction, but Is It Constitutional?, 48

CE Oe. TOR. E.R, Soe a POD vickiveceininsseesseiscccnvesess 10

Mary Twichell, 7he Myth Of General Jurisdiction,

i a, 2. Fey BIO CIS? encnracmnnsan 9

PREVIOUS OPINIONS

The Order of the Supreme Court of Georgia denying the

Petition for Certiorari of First National Bank of Ames, lowa,

to that Court, entered October 2, 2006, Supreme Court Case

No. S06C2001, is not reported and is reproduced at Pet. App.

la.

The Order of the Georgia Court of Appeals denying the

Motion for Reconsideration of First National Bank of Ames,

Iowa, entered July 10, 2006, is not reported and is reproduced

at Pet. App. 2a.

The Memorandum Opinion and Order of the Georgia

Court of Appeals, entered June 20, 2006 is reported at First

National Bank of Ames, lowa v. Innovative Clinical &

Consylting Services, LLC., 280 Ga. App. 337, 634 S.E.2d 88

(2006) and is reproduced at Pet. App. 3a-6a.

The Memorandum Opinion and Order of the Supreme

Court of Georgia, entered October 3, 2005, Supreme Court

Case No. S04C1413 is reported at /nnovative Clinical &

Consulting Services, LLC. v. First National Bank of Ames,

Iowa, 279 Ga. 672, 620 S.E.2d 352 (2005), and is reproduced

at Pet. App. 7a-12a.

The Order of the Georgia Court of Appeals denying the

Motion for Reconsideration of Innovative Clinical &

Consulting Services, LLC, entered April 8, 2004, 1s not

reported and is reproduced at Pet. App. 13a.

The Memorandum Opinion and Order of the Georgia

Court of Appeals, entered March 24, 2004 is reported at First

National Bank of Ames, lowa v. Innovative Clinical &

Consulting Services, LLC., 266 Ga. App. 842, 598 S.E.2d 530

(2004) and is reproduced at Pet. App. 14a-22a.

The Order Denying Motion to Dismiss and Certificate of

Immediate Review of the Superior Court of Fulton County,

entered December 23, 2002, Civil Action File No.

2001cv46283, is rot reported and is reproduced at Pet. App.

23a-25a.

BASIS FOR JURISDICTION

This Court has jurisdiction pursuant to 28 U.S.C § 1257 to

review by writ of certiorari the judgment of the Court of

Appeals of Georgia dated June 20, 2006, which 1s the subject -

of this Petition, in which case a petition for certiorari was

denied by the Supreme Court of Georgia on October 2, 2006.

CONSTITUTIONAL PROVISIONS AND STATUTES

This case involves the Due Process Clause of the

Fourteenth Amendment of the United States Constitution and

the Georgia Long-Arm Statute, O.C.G.A. § 9-10-91.

U.S. CONST. amend. XIV, § 1:

All persons born or naturalized in the United States and

subject to the jurisdiction thereof, are citizens of the

United States and of the State wherein they reside. No

State shall make or enforce any law which shall abridge

the privileges or immunities of citizens of the United

States; nor shall any State deprive any person of life,

liberty, or property, without due process of law; nor deny

to any person within its jurisdiction the equal protection

of the laws.

0.C.G.A. § 9-10-91:

A court of this state may exercise personal jurisdiction

over any non-resident or his executor or administrator, as

to a cause of action arising from any of the acts,

omissions, ownership, use, Or possession enumerated in

this Code section, in the same manner as if he were a

resident of the state, if in person or through an agent, he:

(1) Transacts any business within this state;

(2) Commits a tortious act or omission within this

state, except as to a cause of action for defamation of

character arising from: the act;

(3) Commits a tortious injury in this state caused by an

act or omission outside this state if the tort-feasor

regularly does or solicits business, or engages in any

other persistent course of conduct, or derives

substantial revenue from goods used or consumed or

services rendered in this state;

(4) Owns, uses, or possesses any real property situated

within this state; or

(5) With respect to proceedings for alimony, child

support, or division of property in connection with an

action for divorce or with respect to an independent

action for support of dependents, maintains a

matrimonial domicile in this state at the time of the

commencement of this action or, if the defendant

resided in this state preceding the commencement of

the action, whether cohabiting during that time or not.

This paragraph shall not change the residency

requirement for filing an action for divorce.

STATEMENT OF THE CASE

This case involves a complaint filed in the State of

Georgia against a non-resident bank alleging that the non-

resident bank committed certain torts and breaches of contract

in the administration and operation of two bank accounts

located wholly in the State of lowa, which were established

by lowa citizens and governed by account agreements

executed and performed wholly in the State of lowa. [R.

005}.

Respondent Innovative Clinical and Consulting Services,

LLC (“ICCS”) filed this suit against Petitioner First National

Bank of Ames, lowa (“First National’) to recover damages tt

claimed as a result of an outsourcing relationship ICCS

entered into with an lowa company that happened to be a

customer of First National. [R. 005].

ICCS is a doctor’s office located in Atlanta, Georgia.

[Pet. App. 14a]. In April of 2001, ICCS made the decision to

outsource some of its billing and collection operations. It

outsourced these functions to a company in Iowa where these

functions were to be performed. ICCS entered into two

separate contracts to facilitate this outsourcing. [Pet. App.

15a]. First, ICCS entered into a Services Agreement with two

entities called Med e Fund Corporation and MeF Corporation.

[R. 005; 016-017]. Under this agreement, Med e Fund agreed

to advance money to ICCS for its receivables and agreed to

take charge of the invoicing to and collection from third-party

payors for ICCS. [R. 005; 016-017]. Second, ICCS entered

into a Lease Agreement with an lowa company called A.C.

Financial. [R. 005; 018-024]. Under this agreement, ICCS

leased the hardware and software it needed to facilitate the

_ Invoicing to third-party payors. [R. 005; 018-024]. The

Lease Agreement provided that it would be effective upon

delivery to A.C. Financial’s headquarters in lowa, thus

ensuring that the agreement would be governed by lowa law.

Moreover, the Lease Agreement provided that any dispute

would be resolved in the courts of Iowa. [R. 005; 018-024].

Under the agreements, ICCS and its outsourcing partners

agreed to open bank accounts necessary to facilitate their

relationship in lowa. A.C. Financial went to First National in

Ames, lowa and opened two bank accounts [R. 004; 064].

First National is a bank which provides banking services

wholly within the State of lowa. [R. 063]. First National

does not have offices or employees outside of Ames, lowa.

[R. 063]. Both ICCS and A.C. Financial were permitted to

transact business on these accounts. [R. 064]. Payments

from third-party payors were to be deposited into one of the

bank accounts. [R. 065].

In addition, First National assumed limited responsibility

for servicing the ICCS lease. [R. 065]. This “servicing” was

limited to automatically debiting one of the accounts for lease

payments due and depositing that sum into the second

account. First National invoiced ICCS for the payment due

when, on one occasion, an automated debiting transaction was

rejected. [R. 065].

First National later provided a loan to A.C. Financial. To

secure that loan, First National took a security interest in the

Lease Agreement between A.C. Financial and ICCS. [R.

357]. All actions taken to enforce that security interest have

been taken in Iowa.

It is undisputed that the only contact First National had

with the State of Georgia in connection with this matter was

that the bank statements and correspondence concerning the

account were mailed to ICCS and that First National

responded to an occasional phone call from ICCS regarding

the account. [Pet. App. 16a].

ICCS brought suit against First National on December 6,

2001 in the Superior Court of Fulton County, Georgia.

ICCS’s claims against First National included claims for: a)

fraud and conversion related to the accounts maintained by

First National in the name of ICCS in the State of lowa; b) an

accounting of funds and breach of contract related to those

accounts; c) an injunction concerning funds in those accounts;

and d) a rescission of the Lease Agreement and Services

Agreement.’ [Pet. App. l6a]

Respondent ICCS contended that the Georgia courts had

personal jurisdiction over First National pursuant to the

Georgia Long-Arm Statute. O.C.G.A. § 9-10-91. First

Since the Lease Agreement contains a forum selection clause

providing that actions regarding the Lease Agreement are to be brought in

lowa, the Lease Agreement does not provide a basis for jurisdiction over

First National in Georgia. [R. 005; 018-024].

National moved to dismiss this action'for lack of personal

jurisdiction contending that insufficient minimum contacts

existed on which jurisdiction might be predicated and that the

plaintiff's claims did not arise out of any contacts First

Nationa] did have with the State of Georgia. The Honorable

T. Jackson Bedford, Superior Court of Fulton County, denied

First National’s motion to dismiss. [Pet. App. 23a-25a]. First

National appealed the decision to the Court of Appeals of

Georgia. The Court of Appeals held that First National did

not have the requisite minimum contacts with the State of

Georgia to subject First National to personal jurisdiction in

Georgia and that personal jurisdiction did not exist over First

National pursuant to the ‘transacts business’ prong or the ‘tort

prongs’ of the Georgia Long-Arm Statute. [Pet. App. 14a-22a,

at 19a-20a]. Respondent ICCS petitioned the Supreme Court

of Georgia for a review of the Court of Appeals’ Decision.

The Supreme Court of Georgia elected to hear the

petition. In its opinion, the Supreme Court of Georgia

dramatically altered the pre-existing law of personal

jurisdiction in the State of Georgia, holding that the ‘transacts

business’ prong of the Georgia Long-Arm Statute was no

longer restricted, except by the bounds of procedural due

process. [Pet. App. 7a-12a, at lla]. The Supreme Court of

Georgia affirmed the Court of Appeals’ holding in part,

finding that the trial court could not exercise personal

jurisdiction over First National pursuant to the ‘tort prongs’ of

the Georgia Long-Arm Statute. The Supreme Court of

Georgia vacated the Court of Appeals’ decision as it related to

the ‘transacts business’ prong of the Georgia Long-Arm

Statute and remanded the case for further consideration

consistent with its opinion.

On remand, the Court of Appeals of Georgia held that

First National’s isolated contacts with the State of Georgia

were sufficient to confer personal jurisdiction over First

National, even though the claims asserted did not arise out of

“4d

those isolated contacts. The Court of Appeals then affirmed

the Superior Court’s denial of First National’s motion to

dismiss. [Pet. App. 3a-6a, at Sa-6a].

Following the Georgia Court of Appeals’ second opinion,

First National petitioned the Supreme Court of Georgia for a

writ of certiorari. The Supreme Court of Georgia denied First

National’s petition. [Pet. App. la].

REASONS FOR GRANTING THE WRIT

I. THE COURT SHOULD RESOLVE A CONFLICT

AMONG THE CIRCUITS AND STATES AS TO

WHEN A CAUSE OF ACTION ARISES OUT OF OR

RELATES TO ACTIVITIES IN THE FORUM

STATE FOR THE PURPOSE OF ASSERTING

‘SPECIFIC’ IN PERSONAM JURISDICTION.

This case presents the question of what relationship must

exist between a plaintiff's cause of action and a defendant’s

contacts with the forum state to support the assertion of

“specific” in personam jurisdiction consistent with the Due

Process Clause of the Fourteenth Amendment. This Court

has previously considered this issue, but has yet to resolve it.

See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466

U.S. 408, 415 n.10 (1984); Carnival Cruise Line v. Shute, 499

U.S. 585 (1991).

A finding of specific jurisdiction requires a degree of

relatedness among the “defendant, the forum and _ the

litigation” in order to satisfy the requirements of due process.

Shaffer v. Heitner, 433 U.S. 186, 204 (1977). More

specifically, the plaintiff's claim must “arise out of or relate

to” the non-resident defendant's contacts with the forum state.

Helicopteros, 466 U.S. at 414 n. 8. This requirement

As this Court noted in Helicopteros, “When a controversy is related

to or arises out of a defendant's contacts with the forum, the Court has

said that a relationship among the defendant, the forum and the litigation

originated with this Court in International Shoe Co. vy.

Washington, but has never been defined. 326 U.S. 310, 319

(1945).- In both Helicopteros and Shute, this Court declined

to settle the issue of how the “arise out of or relate to”

requirement should be interpreted. In Helicopteros, this

Court declined to address the issue because the parties did not

make arguments based upon the “arise out of or relate to”

requirement and thus, conceded tat the cause of action did

not “arise out of or relate to” the defendant’s activities.

Helicopteros, 466 U.S. at 415."

The issue surfaced again in Shute where the petitioner

raised the question of whether a negligence action could

“arise out of or relate to” the defendant’s advertising and

ticket sales in the forum state for cruise vacations. Shute, 499

is the essential foundation of in personam jurisdiction.” 466 U.S. at 414

(citing Shaffer, 433 U.S. at 204).

> Burnham v. Superior Court, 495 U.S. 604, 618 (1990) (noting that the

“arise out of or relate to” language originated in /nternational Shoe and

reaffirming the standard requiring that a cause of action must “arise out of

or relate to” the defendant's contacts with the forum state); Burger King v.

Rudzewicz, 471 U.S. 462, 472 (1985) (same); Helicopteros,.466 U.S. at

414 (same); Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 444-45

(1952) (same). See also Ticketmaster-N.Y., Inc. v. Alioto, 26 F.3d 201,

206 (ist Cir. 1994) (noting that the “arise out of or relate to” analysis is

the icast developed prong of the specific jurisdiction inquiry).

Helicopteros, 466 U.S. at 415 n. 10. (“Absent any briefing on the

issue we decline to reach the questions (1) whether the terms ‘arising out

of and ‘related to’ describe different connections between a cause of

action and a defendant’s contacts with a forum, and (2) what sort of tie

between a cause of action and a defendant's contacts with a forum is

necessary to a determination that either connection exists. Nor do we

reach the question whether, if the two types of relationship differ, a

forum’s exercise of personal jurisdiction in a situation where the cause of

action ‘relates to,’ but does not ‘arise out of.’ the defendant's contacts

with the forum should be analyzed as an assertion of specific

jurisdiction.”’).

U.S. at 588-89. The Court declined to address the issue of

whether the Ninth Circuit’s expansive interpretation of the

“arise out of or relates to” standard was appropriate in that

case, and instead disposed of the case on other grounds. /d. at

589.

The question of how the “arise out of or relate to”

_requirement should be interpreted is now ripe for decision.°

The issue is one that frequently arises and has been resolved

in many conflicting ways by the state courts and lower federal

courts. Those courts have developed their own differing and

inconsistent judicial constructs on how far the scope of the

relatedness requirement should extend. Legal commentators

have debated this issue for years.’ Thus, the issue has been

> The Court in Shute held that because a decision on the forum

selection clause issue was dispositive of the case, the Court need not

address the constitutional question of what “arise out of or relate to”

means. /d.

° — See Lea Brilmayer, et al., A General Look at General Jurisdiction, 66

Tex. L. Rev. 721, 737 (1988) (“Just what courts mean when they speak of

this amorphous concept of relatedness, however, is simply unclear.

Practically any contact might appear to be related to the cause of action

and thus support specific jurisdiction. In short, such a vague term offers a

state an apparently boundless jurisdictional reach — a result out of step

with our notions of due process.”).

See, ¢.g., Lawrence W. Moore, The Relatedness Problem In Specific

Jurisdiction, 37 Idaho L. Rev. 583, 591-93 (2001) (discussing the debate

amongst scholars concerning the degree of relatedness required to find

specific jurisdiction); Mary Twichell, The Myth Of General Jurisdiction,

101 Harv. L. Rev. 610, 653 -54 (1988) (arguing for a looser definition of

the relatedness requirement); Lea Brilmayer, Related Contacts and

Personal Jurisdiction, 101 Harv. L. Rev. 1444 (1988) (arguing for a more

narrow definition of the relatedness requirement); Wilham M. Richman,

Review Essay, Part 1 Casad's Jurisdiction in Civil Actions; Part I A

Sliding Scale to Supplement the Distinction Between General and Specific

Jurisdiction, 72 Cal. L. Rev. 1328, 1345 (1984) (advocating a “sliding

scales” approach to the relatedness requirement): Linda Sandstrom

Simard, Hybrid Personal Jurisdiction. It's Not General Jurisdiction, or

sufficiently developed for a resolution by the Court and this

case presents an excellent context for deciding it.

A. The Due Process Clause of the Fourteenth

Amendment Requires Certain Minimum Contacts

to Support Long-Arm Jurisdiction. -

For jurisdiction to exist over a defendant in accordance

with a state’s long-arm statute, including Georgia’s long-arm

statute, the requirements of the Due Process Clause of the

Fourteenth Amendment must be met. Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 474-76 (1985); Breckenridge

Pharmaceutical, Inc. v. Metabolite Laboratories, Inc., 444

F.3d 1361 (11th Cir. 2006); Railcar Ltd. v. Southern Illinois

Railcar Co., 42 F. Supp. 2d 1369, 1371-72 (N.D. Ga 1999).*

“The Due Process Clause protects an individual’s liberty

interest in not being subject to the binding judgments of a

forum with which he has established no meaningful ‘contacts,

ties or relations’.” Burger King, 471 U.S. at 471-72 (citing

International Shoe, 326 U.S. at 319). Thus, a key tenet of the

due process analysis is that a defendant must have certain

“minimum contacts with [the forum state] such that the

maintenance of the suit does not offend ‘traditional notions of

fair play and substantial justice.” %/nternational Shoe, 326

U.S. at 316 (citations omitted).

Specific Jurisdiction, but Is It Constitutional?, 48 Case W. Res. L. Rev.

559, 580-82 (1998) (calling for a hybrid approach for in-between cases).

* — See also Fowler Prods. Co., Inc. v. Coca-Cola Bottling Co. of Tulsa,

Iné., 413 F. Supp. 1339, 1341-42 (D.C. Ga. 1976) (holding that minimum

contacts did not exist for purposes of due process where defendant did

nothing within forum state except accept goods under a FOB contract and

address mail to a Georgia address concerning partial payment under the

contract); Addy v. Club Med.. No. 95-0035, 1997 WL 30205, at *4 (E.D.

La. Jan. 23, 1997).(holding that simply conducting business with someone

residing in the forum state is insufficient to support jurisdiction).

A due process analysis contemplates two types of

personal jurisdiction — general or specific jurisdiction.

Helicopteros, 466 U.S. at 414-15 nn. 8-9.

General jurisdiction arises only from “continuous and

systematic” contacts between the non-resident defendant and

the forum state. The non-resident’s activities must be

“continuous and systematic” for general jurisdiction to exist

over the non-resident. Perkins v. Benguet Consol. Mining

Co., 342 U.S. 437, 438 (1952); Railcar, 42 F. Supp. 2d at

1371-72, 1377 (citing Helicopteros, 466 U.S. at 410-18). In

order to assert general jurisdiction, the non-resident’s contacts

with the forum must be more than “random and fortuitous.”

Helicopteros, 466 U.S. at 416-17.

For specific jurisdiction to exist, however, a non-

resident’s activities need not be continuous and systematic.

Instead, the defendant must have Bigger directed’ his

activities at residents of the forum . . . and the litigation [must

result] from alleged injuries that ‘arise out of or relate to’

those activities.” Burger King, 471 U.S. at 471-72.”

* — Courts have delineated the specific jurisdiction due process test into a

three-part inquiry: (1) the non-resident defendant must purposely avail

himself of the privilege of conducting activities in the forum state (2) the

claim must be one which “arises out of or relates to” the defendant's

forum-related activities; and (3) the exercise of jurisdiction must be

reasonable. See, e.g., Christian Science Bd. of Directors of First Church

of Christ, Scientist v. Nolan, 259 F.3d 209, 216 (4th Cir. 2001); United

States v. Swiss American Bank, Litd., 274 F.3d 610, 621 (Ist Cir. 2001);

Vermeulen v. Renault, U.S.A., Inc., 985 F.2d 1534, 1546 (11th Cir. 1993);

and Rambo v. American So. Ins. Co., 839 F.2d 1415, 1419 n. 6 (10th

Cir.1988). The test applies the principles of Asahi Metal Indus., Co. v.

Superior Court, 480 U.S. 102, 113 (1987) (considering several factors to

determine whether the exercise of jurisdiction is so unreasonable as to

violate “fair play and substantial justice”); Burger King, 471 U.S. at 474-

76 (finding that a non-resident defendant must purposely avail himself of

the privilege of conducting activities in the forum state and that

defendant's contacts must be related to the plaintiff's cause of action or

Regardless of whether a due process analysis

contemplates general or specific jurisdiction, a defendant

must meet the criteria of purposeful availment for a court to

exercise jurisdiction over it. See, e.g., Burger King, 471 U.S.

at 475-76.

First National has not purposefully availed itself of the

laws of the State of Georgia and has not had the requisite

minimum contacts with the State of Georgia for personal

jurisdiction to exist in Georgia. The present dispute involves

bank accounts that. were established at an lowa bank through

actions taken wholly in Iowa and controlled by contracts

executed and to be performed in Iowa.'® Such contacts are

not sufficient to constitute ‘minimum contacts’ with the State

give rise to it); World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,

291-92, 297 (1980) (finding that the exercise of jurisdiction must be

reasonable); Hanson v. Denckla, 357 U.S. 235, 253 (1958) (finding

contacts must involve “some act by which the defendant purposefully

avails itself of the privilege of conducting activities within the forum”);

and /nternational Shoe, 326 U.S. at 319 (requiring that a claim arise out of

or relate to defendant’s contacts with the forum).

'° While the plaintiff has also sought the rescission of the Lease

Agreement, the venue for disputes involving that contract is governed by a

choice of venue clause and thus not germane to the jurisdictional dispute

here. (R. 005; 018-024]. Even when a party seeks rescission of a

contract, the forum selection clause in that contract stands. See, e.g.,

Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 at n. 14, 94 S.Ct. 2449,

2457 (1974) (rejecting the notion that “any time a dispute arising out of a

transaction is based upon an allegation of fraud ... the [forum-selection]

clause is unenforceable,” and holding that rather, a “forum-selection

clause im a contract is not enforceable if the inclusion of that clause in the

contract was the product of fraud or coercion.”); Republic Credit Corp. |

v. Rance, 172 F. Supp. 2d 1178, 1183 (S.D. lowa 2001) (same).

of Georgia for purposes of personal jurisdiction. See Hanson

v, Denckla, 357 U.S. 235 (1958).'!

B. There Is a Serious Division of Authority Among

State and Federal Courts Regarding the

interpretation of the Phrase “Arise Out of or

Relate To.”

Since this Court decided Helicopteros, the lower federal

and state courts have varied widely in their interpretation of

how the “arise out of or relate to” requirement for specific

personal jurisdiction should be interpreted. The courts have

essentially developed two main conflicting tests, with various

interpretations of those tests and names for those tests, to

address the issue of what relationship must exist between the

litigation and the defendant’s activities in the forum state so

'! “In Hanson v. Denckla, this Court held that a Florida court did not

have specific personal jurisdiction over a Delaware trustee in an action

concerning the parties’ rights to a trust. The controversy in Hanson

involved the validity of a trust agreement that was executed in Delaware

by a trust company incorporated in Delaware and by a settler domiciled in

Pennsylvania. /d. at 252. The defendant’s only contacts with Florida

involved the remittance by mail of trust income to beneficiaries who

moved to that state after the trust was formed. /d. Analyzing these facts,

this Court held that the lawsuit “[could] not be said to be one to enforce an

obligation that arose from a privilege the defendant exercised in Florida.”

Jd. Rather, “it 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.” /d. at 253. Accordingly, because the cause of

action was not one that arose out of an act done or consummated in

Florida, jurisdiction over the defendant did not exist. /d. at 251.

See also Bertke v. Cartledge, 597 F. Supp. 68, 71-72 (D.C. Ga. 1984)

(finding Georgia defendant whose business was located solely in Georgia

did not purposefully avail himself of the privileges of the forum State of

Kentucky, where the defendant had never visited or done business in

Kentucky, the contract at issue was to be performed wholly in Georgia

and the plaintiff was the first to initiate contact with the defendant).

as to support the assertion of specific jurisdiction.

Essentially, the debate is split between those courts who

advocate that a weak connection to the forum is sufficient,

and those courts who advocate that a stronger connection to

the forum is warranted to exercise personal jurisdiction over

an out-of-state defendant.

The primary conflicting tests developed by courts include:

the “but for” test and the “substantive relevance-proximate

cause” test, although the courts may use different terms to

identify the test used.'*

Many courts have adopted the “but for” test. The “but

for” test considers whether a plaintiff's claims would have

arisen ‘but for’ the defendant’s contacts with the forum state.

Doe v. Unocal Corp., 248 F.3d 915, 924 (9th Cir. 2001);

Shute v. Carnival Cruise Lines, 897 F.2d 377 (9th Cir. 1990),

rev'd on other grounds, 499 U.S. 585 (1991).'° The “but for”

'2 Several different tests have been promoted by various courts and

scholars, but all roughly fall into either the “but for” or “proximate cause”

category or are a derivative of the two tests. See, e.g., Flavio Rose,

Comment, Related Contacts and Personal Jurisdiction: The "But For"

Test, 82 Cal. L. Rev. 1545, 1579-84 (1994) (identifying the following

possible relatedness tests as an alternative to the “but for” test: (1) the

“substantive relevance” test, (2) the “could have been causation” test or

(3) the “sliding scales” theory).

'S See also Prejean v. Stonatrach, Inc., 652 F.2d 1260, 1270 n. 21(5th

Cir. 1981) (suggesting that specific jurisdiction can be found in situations

where ‘but for’ the parties entering into a contract, a tort action would not

have arisen), but see Luna v. Compania Panamena De Aviacion, S.A., 851

F. Supp. 826, 832-33 (S.D. Tex. 1994) (“The question of whether a cause

of action arises out of or relates to a defendant's forum contact is

analogous to the issue of proximate cause in tort law.”) (citation omitted);

Kervin v. Red River Ski Area, Inc., 711 F. Supp. 1383, 1389-90 (E.D. Tex.

1989) (noting that courts were inclined to take a more restrictive view of

what the phrase ‘arise out of and relate to” requires).

test 1s considered an expansive test because there is no limit

on how far the test can logically extend. Conceivably, almost

any remote contact that a defendant has with a forum state

can be the basis for specific jurisdiction if it can be couched

as, “but for” the defendant’s contact with the forum state, no

matter how remote, the plaintiff's cause of action would not

have occurred.'* Other courts have employed the substantive

relevance-proximate cause test, which provides a more strict

interpretation of the phrase “arises out of or relates to.”

Under this test, some courts and scholars believe that it

requires that the cause of action be “substantially related” to

the defendant’s contacts with the forum state. See Bird v.

Parsons, 289 F.3d 865, 875 (6th Cir. 2002).'° See also Lea

The Seventh Circuit applies a ‘but for’ test but generally uses the term

‘lies in the wake’ to describe it. See Deluxe Ice Cream Co. v. R.C.H. Tool

Corp., 726 F.2d 1209, 1215-16 (7th Cir. 1984) (finding the pre-contractual

negotiations between the parties in the forum state “lies in the wake” of

the breach of warranty action and thus, specific jurisdiction may be

found); Jn re Oil Spill by Amoco Cadiz Off Coast of France, 699 F.2d 909

(7th Cir. 1983), cert. denied, 464 U.S. 864 (1983) (the contract

negotiations and signing of contract in the forum state “lies in the wake”

of the action ior damages related to an oil spill caused by the break-up of

an oil tanker).

'* In rejecting the “but for” test, the First Circuit has described this test

as follows: “A ‘but for’ requirement . . . has tn itself no limiting principle;

it literally embraces every event that hindsight can logically identify in the

causative chain ...”. Nowak v. Tak How Investments, Lid., 94 F.3d 708,

715 (Ist Cir. 1996).

1S See also Sawtelle v. Farrell 70 F.3d 1381, 1389 (1st Cir. 1995) (“The

relatedness requirement is not met merely because a plaintiff's cause of

action arose out of the general relationship between the parties; rather, the

action must directly arise out of the specific contacts between the

defendant and the forum state.”); Miller Yacht Sales, Inc. v. Smith, 384

F.3d 93, 104 (3rd Cir. 2004) (The Third Circuit held that, “[a]lthough we

have not expressly articulated our view on the “arise out of or relate to”

requirement, our cases implicitly apply an immediate or proximate cause

standard.”); Pearrow v. National Life and Acc. Ins. Co., 703 F.2d 1067,

Brilmayer, How Contacts Count: Due Process Limitations on

State Court Jurisdiction, 1980 Sup. Ct. Rev. 77, 82 (1981)

(“A contact is related to the controversy if it is the

geographical qualification of a fact relevant to the merits.”);

Lea Brilmayer, Related Contacts and Personal Jurisdiction,

101 Harv. L. Rev. 1444, 1451-58 (1988) (using the term

“substantive relevance”).

Some courts analogize the proximate cause test to the

proximate cause requirement under tort law. See Luna v.

Compania Panamena De Aviacion, S.A., 851 F. Supp. 826,

832-33 (S.D. Tex. 1994).'° Courts have suggested that under

the proximate cause test, the forum contacts must be a

material proof of an element of the cause of action. Marino v.

Hyatt Corp., 793 F.2d 427, 430 (1st Cir. 1986) (interpreting

Massachusetts long arm statute, which employs a proximate

cause analysis to the relatedness requirement, and finding

plaintiffs’ hotel reservations were not “a material element of

proof in their slip and fall case”).

1069 (8th Cir. 1983) (The Eighth Circuit appears to employ a proximate

cause analysis in interpreting Arkansas’ long arm statute and finding the

defendant’s connection to the forum too tenuous to find that plaintiff's

cause of action for negligence “arose out of” activity in the state); First

Mortgage Corp. v. State Street Bank and Trust Co., 173 F. Supp. 2d 1167,

1175 (D. Utah 2001) (“A ‘nexus’ must exist between the plaintiff's claims

and the defendant’s acts or contacts.”), but see, Beverly Kuenzle v. HTM

Sport-Und Freizeitgerate AG, 102 F.3d 453, 456-57 (10th Cir. 1996)

(holding that the ‘arise out of requirement for specific jurisdiction was

not satisfied where the plaintiff's accident would have occurred in the

forum state even if the defendant had not made the contacts relied upon by

the plaintiff).

‘© See. e.g., Pizarro v. Hoteles Concorde Int'l, 907 F.2d 1256, 1259 (Ist

Cir. 1990) (interpreting Puerto Rico's long arm statute, which is akin to

the due process specific jurisdiction analysis, and determining, “[w]hether

certain events arise out of a non-resident defendant’s actions within the

forum state is comparable or analogous to whether certain actions can be

said to be the legal, or proximate cause of injuries suffered by a plaintiff’).

Other courts have, instead of specifically adopting either

of the main two tests, developed thcir own definition of what

“arise out of or relates to” means.’’ Some state courts have

declined to adopt either the “but for” or the proximate cause

standard. Instead, these state courts apply their own

interpretation of what the “arise out of or relate to” phrase

means.'* Other state courts decline to articulate any test and

See, e.g., Woods Intern., Inc. v. McRoy, 436 F. Supp. 2d 744, 749

(M.D. N.C. 2006) (citing ALS Scan, Inc. v. Digital Service Consultants,

Inc., 293 F.3d 707, 713-14 (4th Cir. 2002) (noting that the Fourth Circuit

has adopted a “sliding scales” approach to analyzing internet based

contacts); Chew v. Dietrich, 143 F.3d 24, 29-30 (2d Cir. 1998) (“Where

the defendant has had only limited contacts with the state it may be

appropriate to say that he will be subject to suit in that state only if the

plaintiff's injury was proximately caused by those contacts.”); Static

Control Components, Inc. vv. Intersolution Ventures Ltd., No.

1:05CV004017, 2006 WL 2042900, at *8-9 (M.D. N.C. July 17, 2006)

(“In determining whether a claim is sufficiently related to forum-related

activities, circuits have applied different tests . . . In this case, there is a

sufficient connection between the claims and contacts under either test to

support personal] jurisdiction.”).

'* California: Vons. Cos. v. Seabest Foods, Inc., 926 P.2d 1085, 1093-

97, (Cal. 1996), cert. denied, 522 U.S. 808 (1997) (addressing the

strengths and weakness of both tests and finding the “but for” test to be

overly broad and the “proximate cause” test too narrow and instead,

reaffirming a test that it had already articulated in earlier California case

law: “The crucial inquiry concerns the character of defendant's activity in

the forum, whether the cause of action arises out of or has a substantial

connection with that activity, and upon the balancing of the convenience

of the partics and the interests of the state in assuming jurisdiction.”);

Missouri: Davis v. Baylor University, 976 S.W.2d 5, 8-9 (Mo. App.

W.D. 1998) (also refusing to adopt either fest and instead instituting “a

balancing test that is akin to the ‘sliding scale’ approach” where the court

considers five factors: “(1) the nature and quality of the contacts with the

forum state, (2) the quantity of contacts with the forum state, (3) the

relation of the cause of action to the contacts, (4) the interest of the forum

state in providing a forum for its residents, and (5) the convenience to the

parties”); District of Columbia: Shoppers Food Warehouse v. Moreno,

instead employ a factual analysis or decide the jurisdictional

question on another prong of the specific jurisdiction

analysis.”

In this case, the Court of Appeals of Georgia has taken the

analysis one step further. Although the Court of Appeals is

silent on the precise test employed to determine relatedness

(to the extent it employs any test at all) the holding of the

Georgia Court of Appeals represents a vast expansion of the

‘but for’ test adopted by other courts. The Court of Appeals

has effectively held that a plaintiff's cause of action need not

necessarily ‘arise out’ of the non-resident’s contacts with the

state at all. Under the Georgia Court of Appeals’ decision,

contacts that have an ephemeral connection to a cause of

action can be sufficient to support specific personal

746 A.2d 320, 335-36 (D.C. 2000) (“Based upon our review of nexus tests

used in other jurisdictions, the criticisms leveled at some of them, and the

Supreme Court’s admonition that there are no “mechanica] tests” or

“talismanic formulas” for the determination of personal jurisdiction, we

see no reason to deviate from-- and thus we reaffirm--our past decisions

which have interpreted the “arise from” language of [our long arm statute]

flexibly and synonymously with “relate to” or having a “substantial

connection with,” in the same way that the Supreme Court’s due process

analysis has used these terms interchangeably. This means that, for the

Superior Court to have jurisdiction over [the plaintiff's] claim, the claim

had to be related to or substantially connected with [the defendant’s]

advertising activity in the District . . . that is [] it had to have some

“discernible relationship” to [the defendant's] advertising activity.”)

(internal citations omitted). :

'9 See, e.g., White v. Roberts, *%* §.E.2d 584, 586 (Ga. Ct. App. 1995)

(recognizing the “arise out of or relate to” relatedness requirement, but

focusing only on the ‘purposeful availment’ prong of the specific

jurisdiction analysis); Marten v. Silva 200 S.W.3d 297, 301-302 (Tex. Ct.

App. 2006) (same); State of S.C. v. Reeves, 423 S.E.2d 32, 34 (Ga. Ct.

App. 1992) (failing to employ any relatedness test but rather, perfunctorily

holding that plaintiff's claims “neither arise out of or results from”

defendant's contacts with the forum State of Georgia).

jurisdiction over a non-resident defendant. [Pet. App. 5a].

Even the ‘but for’ analysis requires some causal connection

between the defendant's contacts and the cause of action.””

The Georgia Court of Appeals’ decision raises important

questions on just how far courts can stretch the relatedness

requirement embodied in the “arise out of or relate to”

language of /nternational Shoe without violating the Due

Process Clause. 366 U.S. at 319.

C. This Is An Appropriate Case For Resolving

The Question Presented.

The case presently before the Court presents an excellent

context for deciding this issue. This case illustrates how,

without guidance on how to construe the phrase “arise out of

or relate to,” a court can extend specific in personam

jurisdiction over a defendant when the defendant’s contacts

with the forum have little to do with the plaintiff's cause of

action. What is clear is that due process demands that a

defendant’s contacts “arise out of or relate to” the plaintiff's

claims. /nternational Shoe, 326 U.S. at 319. What is not

clear is the precise nexus required in order to satisfy due

process. |

If this Court declines to review and reverse the decision of

the Georgia Court of Appeals, absurd and necessarily

unconstitutional results will follow. Under the Georgia Court

of Appeals’ current holding, a Georgia citizen could travel to

Alaska, establish a bank account at a bank there, and when

20 Shute v. Carnival Cruise Lines, 897 F.2d 377, 383-86 (9th Cir. 1990),

rev'd on other grounds, 499 U.S. 585 (1991) (‘but for’ the advertising,

plaintiff would not have gone on a cruise and been injured); Deluxe Ice

Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209 (7th Cir. 1984) (“but for’

preliminary negotiations of a contract in the forum state, the contract

would not have been entered and the breach would not have occurred).

disputes over the account arose, assert personal jurisdiction

over the bank in Georgia solely on the basis that statements

were routinely mailed to the Georgia citizen at his address in

Georgia. The due process clause simply does not contemplate

the assertion of jurisdiction under such circumstances. See

Hanson v. Denckla, 357 U.S. 235 (1958).

The federal and state courts need a decision by this Court

as to which analysis of the ‘arise out of or relate to’

requirement must be used to determine whether jurisdiction

may be constitutionally exercised over a _ non-resident

defendant.

CONCLUSION

First National respectfully submits that this Petition for

Certiorari should be accepted.

Respectfully submitted,

WILLIAM V. CUSTER, IV

Counsel of Record

JENNIFER B. DEMPSEY

ADWOA W.D. GHARTEY-TAGOE

POWELL GOLDSTEIN LLP

One Atlantic Center

1201 West Peachtree St., N.W.

Atlanta, Georgia 30309-3488

(404) 572-6600

Counsel for Petitioner

First National Bank of Ames, lowa

APPENDIX

i Poe

oy,

pide

Cee eh

ihe

SUPREME COURT OF THE STATE OF GEORGIA

CLERK’S OFFICE

ATLANTA

Date: October 02, 2006

William V. Custer IV

POWELL GOLDSTEIN LLP

One Atlantic Center, Fourteenth Floor

1201 West Peachtree Street, N.W.

Atlanta, GA 303093488

Case No. S06C2001

FIRST NATIONAL BANK OF AMES, IOWA v.

INNOVATIVE CLINICAL AND CONSULTING

SERVICES, LLC, d/b/a TOCO HILLS URGENT CARE

COURT OF APPEALS CASE NO. A03A1767

The Supreme Court today denied the petition for

certiorari in this case.

All the Justices concur.

Therese S. Barnes, Clerk

Court of Appeals

of the State of Georgia

ATLANTA, JULY 10, 2006

The Court of Appeals passed the following order

Case No. A03A1767

FIRST NATIONAL BANK OF AMES, IOWA V.

INNOVATIVE CLINICAL AND CONSULTING

SERVICES, LLC. D/B/A TOCO HILLS URGENT CARE

Upon consideration of the motion for reconsideration

filed in this case, it is ordered that it be hereby denied.

Court of Appeals of the State of Georgia

Clerk's Office, Atlanta JUL 10, 2006

! certify that the above is a true extract from the

minutes of the Court of Appeals of Georgia.

Witness my signature and the seal of said court

hereto affixed the day and year last above written.

Clerk.

FOURTH DIVISION

RUFFIN, C.J.,

SMITH, P.J., MILLER, J.

NOTICE: Motions for reconsideration must be

physically received in our clerk’s office within ten

days of the date of decision to be deemed timely filed.

(Court of Appeals Rules 4 and 37, September 5, 2002)

http://www.gaappeals.us/rules/

June 20, 2006

In the Court of Appeals of Georgia

A03A1767. FIRST NATIONAL BANK OF AMES, IOWA

v. Sm-079 INNOVATIVE CLINICAL &

CONSULTING SERVICES, LLC.

SMITH, Presiding Judge.

In /nnovative Clinical and Consulting Svcs. v. First

Nat. Bank., 279 Ga. 672 (620 SE2d 352)(2005), the Georgia

Supreme Court affirmed Division 2, disapproved language in

Division 3, and reversed Division | of our opinion in First

Nat. Bank v. Innovative Clinical and Consulting Svcs., 266

Ga. App. 842 (598 SE2d 530)(2004). The Supreme Court

remanded the case to this court for action not inconsistent

with its opinion. On remand, applying our Supreme Court’s

more expansive construction of OCGA § 9-10-01(1), we

conclude that the trial court correctly exercised personal

jurisdiction over the lowa bank. We therefore affirm the trial

court’s denial of the bank’s motion to dismiss.

In Division | of our prior opinion, we concluded that

the trial court had no personal jurisdiction over the bank

under subsection (1) of Georgia’s Long Arm statute, OCGA §

9-10-91(1).7' In its opinion, the Georgia Supreme Court

recognized that “no explicit legislative limiting conditions”

were placed upon subsection | of OCGA § 9-10-91. It held

that just as we may not expand subsection 3 of the statute in

conflict with the express limitations placed upon it by the

Georgia General Assembly, so we may not constrict

subsection | of the statute by engrafting upon it limitations

the legislature has not enacted. First Nat. Bank, supra, 279

Ga. at 675. The Supreme Court therefore expressly overruled

prior decisions “that fail to accord the appropriate breadth to .

the construction of the “transacting any business’ language of

OCGA § 9-10-91(1).” Id. at 676.

In so doing, the Supreme Court also recognized that

this court, believing “it was bound by prior precedent,...did

not fully consider whether the trial court had personal

jurisdiction over the lowa bank under OCGA § 9-10-91(1).”

Id. The Supreme Court therefore vacated Division | of our

opinion and remanded the case to this court for action

consistent with the now-broader scope of OCGA §

9-10-91(1). Id.

Divisions | and 3 of our opinion are hereby vacated

and the opinion of the Supreme Court made the opinion of

this court. As directed, we now consider whether consistent

with the maximum extent permitted by procedural due

process, the trial court has personal jurisdiction over the lowa

bank.

We conclude, as did the trial court, that it does.

Although the bank did not have a physical presence in this

*! The facts of this case are fully set forth in First Nat. Bank, supra,

266 Ga. App. at 842-843.

state, it is undisputed that the bank had both telephone and

written communication with ICCS with regard to the lowa

bank accounts. Without question, those bank accounts were a

part of the bank’s “business.” In the course of that business,

when the bank’s customer, Med e Fund, failed to make

payments on the lease agreement, the bank sought to hold

ICCS, a Georgia entity with no connection to lowa,

responsible. Even if the bank did not “regularly” conduct

business or engage in a “persistent course of conduct” in

Georgia, OCGA § 9-10-91(3), no doubt exists that the bank

sought to derive economic benefit from its interstate business

activity involving ICCS. To that end, its postal, telephone,

and other intangible Georgia contacts suffice to bring it

within the purview of OCGA § 9-10-91 (1). See generally

Aero Toy Store, LLC v. Grieves, ___ Ga. App. (case

no. A06A0741, decided May 23, 2006).

[2] We must also consider whether these acts meet the

constitutional standard for minimum contacts. See Coe &

Payne Co. v. Wood-Mosaic Corp., 230 Ga. 58, 60 (195 SE2d

399)(1973). Clearly, the bank’s “business” was not brought

to Georgia through a “unilateral action” of ICCS. See Burger

King Corp. v. Rudzewicz, 471 U.S. 462, 474-475 (105 SC

2174, 85 LE2d 528) (1985). The bank sought out ICCS when

its lowa customer defaulted, and Georgia has an interest, as

does every state, in providing its own citizens with a

convenient forum for redressing injuries wrought by non-

residents who have sought the state’s citizens out for the

purpose of business gain. Id. at 473-474

Because the bank transacted some business in

Georgia, even if only with this one customer, and because that

business was sufficient to meet the constitutional standard for

minimum contacts with this state, we conclude that the trial

court did not err in denying the bank’s motion to dismiss for

lack of personal jurisdiction.

Judgment affirmed. C. J., and Miller, J., concur

In the Supreme Court of Georgia

Decided: Oct — 3 2005

S04G1413. INNOVATIVE CLINICAL AND

CONSULTING SERVICES, LLC v. FIRST

NATIONAL BANK OF AMES, IOWA.

HUNSTEIN, Presiding Justice.

We granted certiorari from the holding in First

National Bank of Ames, lowa v. Innovative Clinical and

Consulting Services, LLC., 266 Ga. App. 842 (598: SE2d 530)

(2004) to address perceived inconsistencies in our precedents

defining the scope of personal jurisdiction that Georgia courts

may exercise over non-residents pursuant to OCGA § 9-10-

91, the Georgia long-arm statute. We reiterate our holding in

Gust v. Flint, 257 Ga. 129 (356 SE2d 513) (1987), that “[t]he

rule that controls is our statute, which requires that an out-of-

state defendant must do certain acts within the State of

Georgia before he can be subjected to personal jurisdiction.”

Id. at 130. However, because as set forth below we conclude

that our earlier opinions have unduly limited the literal

language of OCGA § 9-10-91, we reverse in part the holding

of the Court of Appeals and remand this case for further

consideration by that court.

OCGA § 9-10-91 provides in pertinent part that a

court of this State

may exercise personal jurisdiction over any non-

resident..., as to a cause of action arising from

any of the acts, omissions, ownership, use, or

possession enumerated in this Code section, in the

same manner as if he were a resident of the state,

if in person or through an agent, he:

(1) Transacts any business within this state;

(2) Commits a tortious act or omission within

this state;

(3) Commits a tortious injury in this state caused

by an act or omission outside this state if the tort-

feasor regularly does or solicits business, or engages

in any other persistent course of conduct, or derives

substantial revenue from goods used or consumed

or services rendered in this state;....

Prior to our holding in Gust, this Court in Clarkson Power

Flow_v. Thompson, 244 Ga. 300, 301 (260 SE2d 9) (1979)

expanded subsection (2) to encompass non-residents in those

situations where the cause of action arising from injury in

Georgia resulted from a tortious act or omission occurring

outside this State, see also Shellenberger v. Tanner, 138 Ga.

App. 399(2) (227 SE2d 266) (1976), holding that there was

“no essential difference” between subsection (2) and (3).

Clarkson Power Flow, supra at 301. Because subsection (2),

unlike subsection (3), contained no explicit legislative limiting

conditions, we held that subsection (2) was constrained only

by, and thus was co-extensive with, the Fourteenth

Amendment of the U.S. Constitution. Coe & Payne Co. v.

Wood-Mosaic Corp., 230 Ga. 58, 61-62 (195 SE2d 399)

(1973). See also First United Bank of Miss. v. First Nat. Bank

of Atlanta, 255 Ga. 505, 506 (340 SE2d 597) (1986). In Gust

the Court rejected these cases and returned to a “literal

construction” of OCGA § 9-10-91, Gust, supra, 257 Ga. at

130, thus holding that a non-resident “must do certain acts” as

delineated by the statute before the non-resident could be

subjected to personal jurisdiction in Georgia. Id. This

holding reinstated the difference between subsections (2) and

(3) established by the literal language of the statute. Thus,

under subsection (2) a Georgia court may exercise personal

jurisdiction over a non-resident who commits a tortious act or

omission within this State,”* insofar as the exercise of that

personal jurisdiction comports with constitutional due process;

and under subsection (3) a Georgia court may exercise

personal jurisdiction over a non-resident who commits a

tortious injury in Georgia caused by an act or omission outside

Georgia only if the tortfeasor “regularly does or solicits

business, or engages in any other persistent course of conduct,

or derives substantial revenue from goods used or consumed

or services rendered in this state,” notwithstanding that these

limiting conditions may preclude a Georgia court from

exercising personal jurisdiction over the non-resident to the

fullest extent permitted by constitutional due process. Gust,

supra.”°

*? The Legislature provided only one exception to subsection (2),

namely, actions for defamation of character arising from the tortious act.

** Dicta in footnote | in Allstate Ins. Co. v. Klein, 262 Ga. 599 (422

SE2d 863) (1992), a case involving jurisdiction over a defendant who was

a Georgia resident so that OCGA § 9-10-91 was wholly inapplicable, does

not support a different conclusion because that footnote cited only to cases

rendered prior to Gust, supra. Although the Federal courts persist in

reiterating the language from First United Bank of Mississippi, supra, that

Georgia’s long arm statute confers in personam jurisdiction to the

maximum extent allowed by the due process clause of the US.

Constitution, e.g., Francosteel Corp. v. M/V_Charm, 19 F3d 624(1V) (11th

Cir. 1994), the First United holding was superseded by Gust, supra. The

Eleventh Circuit’s interpretation of OCGA § 9-10-91 is not binding on

this Court and it is not necessary for this Court to correct erroneous

Federal interpretations of our State’s statutes for the precedential value of

our opinions to remain the controlling authority on the proper

interpretation of those statutes. See contra CareKeeper Software Dev. Co.

v. Silver, 46 F.Supp.2d 1366, 1369 fn. | (N.D.Ga.1999) (following the

erroncous interpretation given OCGA § 9-10-91 by Francosteel, supra,

because the district court “has not found any contrary Georgia Supreme

Court authority decided since the Eleventh Circuit’s decision” in that

case).

10a

For over 17 years the justices of this Court and the

judges of the Court of Appeals have urged the Legislature to

amend Georgia’s long-arm statute so as to provide the

maximum protection for Georgia residents damaged by the

out-of-state acts or omissions committed by non-resident

tortfeasors. See Gust, supra, 257 Ga. at 130 (Gregory, J.,

concurring); Phears v. Doyne, 220 Ga. App. 550, 552 (470

SE2d 236) (1996) (Beasley, C.J., concurring). Despite the

eloquence of these pleas, the Legislature has chosen to retain

the statutory limitations on in personam jurisdiction set forth

in OCGA § 9-10-91(3). In our system of checks and

balances, it is as inappropriate for the judicial branch to

encroach upon the powers of the legislative or executive

branches as it would be for either of those branches to

encroach upon the powers of the judicial branch. Thus,

contrary to the statements in Division 3 of the Court of

Appeals’ opinion below, the fact that Georgians damaged by

non-residents are deprived of a forum in this State to the

fullest extent permitted by due process is not the result of

court decisions interpreting OCGA § 9-10-91(3) but the result

of the plain and unambiguous language of OCGA § 9-10-91.

The courts cannot reject the plain language of a statute unless

it will result in unreasonable consequences or absurd results

not contemplated by the Legislature. See generally Haugen v.

Henry County, 277 Ga. 743(2) (594 SE2d 324) (2004);

Hollowell v. Jove, 247 Ga. 678, 681 (279 SE2d 430) (1981).

Accordingly, under these circumstances, the courts may not

interpret OCGA § 9-10-91 to provide what the Legislature

chose to omit.

However, our holding in Gust necessarily affects the

construction heretofore applied to subsection (1) of OCGA §

9-10-91. That subsection authorizes a Georgia court to

exercise personal junsdiction over a non-resident who

“(t]ransacts any business within” Georgia. As is the case with

subsection (2), there are no explicit legislative limiting

lla

conditions on this language. Nothing in subsection (1) limits

its application to contract cases, but see Whitaker _v.

Krestmark of Alabama, Inc., 157 Ga. App. 536(1) (278 SE2d

116) (1981); nothing in subsection (1) requires the physical

presence of the non-resident in Georgia or minimizes the

import of a non-resident’s intangible contacts with the State.

But see Wise v. State Board &c., of Architects, 247 Ga. 206,

209 (274 SE2d 544) (1981). Although Georgia courts have

engrafted these and other requirements onto subsection (1),

such requirements conflict with the literal language of the

statute. To be consistent with Gust and the well-established

rules of statutory interpretation that preclude judicial

construction of plain and unambiguous statutory language,

Six Flags Over Ga. Il v. Kull, 276 Ga. 210, 211 (576 SE2d

880) (2003), we must give the same literal construction to

subsection (1) of OCGA § 9-10-91 that we give to the other

subsections. Accordingly, under that literal construction,

OCGA § 9-10-91(1) grants Georgia courts the unlimited

authority to exercise personal jurisdiction over any non-

resident who transacts any business in this State. Of course,

because this statutory language would expand the personal

jurisdiction of Georgia courts beyond that permitted by

constitutional due process, we accordingly construe

subsection (1) as reaching only “to the maximum extent

permitted by procedural due process.” Coe & Payne Co.,

‘supra, 230 Ga. at 60. See generally Beasley v. Beasley, 260

Ga. 419, 421 (396 SE2d 222) (1990) (explicating the

minimum contacts required for proper exercise of long arm

jurisdiction). See also Asahi Metal Indus. Co. v. Superior

Court of California, 480 U.S. 102(II)A) (107 SC 1026, 94

LE2d 92 (1987) (due process clause of the Fourteenth

Amendment constrains states’ exercise of personal

jurisdiction over non-residents). We hereby overrule all prior

cases that fail to accord the appropriate breadth to the

construction of the “transacting any business” language of

OCGA § 9-10-91(1).

12a

The Court of Appeals in this case correctly recognized

that the trial court did not have personal jurisdiction over the

lowa bank under subsections (2) and (3) of OCGA § 9-10-91

because no question of fact remains” that the Iowa bank did

not commit a tortious aci within Georgia and that the lowa

bank does not regularly conduct or solicit business in

Georgia, engage in any other persistent course of conduct in

Georgia or otherwise derive substantial revenue from goods

used or consumed or services rendered in Georgia.””

However, because it was bound by prior precedent, the Court

of Appeals did not fully consider whether the trial court had

personal jurisdiction over the lowa bank under OCGA

§ 9-10-91(1), limiting its review to ICCS’s breach of contract

claim and that evidence establishing the lack of physical

contacts (i.e., the presence of only postal and telephonic

contacts) to connect the lowa bank with Georgia. That

limited review is no longer appropriate. Therefore, we affirm

Division 2 of the Court of Appeals’ opinion; disapprove the

language in Division 3; and vacate and remand Division | to

the Court of Appeals for action not inconsistent with this

opinion.

Judgment affirmed in part, vacated in part and case

remanded with direction. Al] the Justices concur.

** The facts of this case are more fully set forth in First National

Bank of Ames, lowa, supra, 266 Ga. App. at 842-843.

** While OCGA § 9-10-91(1) requires only that the non-resident

transact any business in Georgia, subsection (3) requires “regular,”

“persistent” or “substantial” contact with this State in order for Georgia

courts to exercise personal jurisdiction over non-resident tortfeasors.

13a

Court of Appeals

of the State of Georgia

ATLANTA, APRIL 08, 2004

The Court of Appeals passed the following order

Case No, A03A1767

FIRST NATIONAL BANK OF AMES, IOWA V.

INNOVATIVE CLINICAL AND CONSULTING

SERVICES, LLC. D/B/A TOCO HILLS URGENT CARE

Upon consideration of the motion for reconsideration

filed in this case, it is ordered that it be hereby denied.

Court of Appeals of the State of Georgia

Clerk's Office, Atlanta APR 08, 2004

/ certify that the above is a true extract from the

minutes of the Court of Appeals of Georgia.

Witness my signature and the seal of said court

hereto affixed the day and year last above written.

Clerk.

/s/ 7

l4a

FOURTH DIVISION

SMITH, C.J.,

RUFFIN, P.J., MILLER, J.

NOTICE: Motions for reconsideration must be

physically received in our clerk’s office within ten

days of the date of decision to be deemed timely filed.

(Court of Appeals Rules 4 and 37, September 5, 2002)

http://www.gaappeals.us/rules/

March 24, 2004

In the Court of Appeals of Georgia

A03A1767. FIRST NATIONAL BANK OF AMES, IOWA

v. Sm-079 INNOVATIVE CLINICAL &

CONSULTING SERVICES, LLC.

SMITH, Chief Judge.

We granted the application of First National Bank of

Ames, Iowa (the bank) for an interlocutory appeal. The bank

appeals from the trial court’s denial of its motion to dismiss

for lack of personal jurisdiction the action brought against it

by Innovative Clinical & Consulting Services, LLC, d/b/a

Toco Hills Urgent Care (ICCS). Because we find that the

bank proved lack of jurisdiction under the Georgia Long-Arm

statute, OCGA § 9-10-91, and the trial court should have

granted its motion to dismiss, we reverse.

The record shows without dispute that ICCS 1s a

medical facility in Atlanta managed in part by Health Care

Network Solutions (HNS). HNS entered into two agreements

1Sa

to outsource some of its billing and collection operations.

Under one agreement (the servicing agreement), a company

called Med e Fund” agreed to advance funds to HNS for its

receivables, and to invoice and collect from third-party

payors. The other agreement, between ICCS and A.C.

Financial Corporation, an affiliate of Med e Fund, was a lease

agreement covering certain hardware and software to be

installed in ICCS’s office to facilitate processing the

receivables.

A.C. Financial is based in Ames, Iowa, and it was a

customer of the bank. It had several accounts at the bank, and

the bank had made secured loans to it. The bank was not a

party to either of the agreements in issue. But as collateral for

one loan to A.C. Financial, the bank took a security interest

in the lease agreement between ICCS and A.C. Financial and

ICCS.

After A.C. Financial entered into the lease agreement

with ICCS, it opened two bank accounts at the bank’s branch

in Ames, lowa. According to Med e Fund’s representations

to ICCS, one of these accounts was supposed to be a

“lockbox” account, where third party payors would send their

payments to ICCS. Med e Fund also represented to ICCS that

it would advance funds against the receivables and that no

funds would be withdrawn from the “lockbox” account

without the express approval of ICCS after a periodic

accounting. No advances were ever made, no accounting

ever took place, and neither account opened at the bank was a

“lockbox” account. Instead, A.C. Financial arranged for the

bank to debit automatically one of the accounts, into which

funds from the third-party payors had been deposited, for the

lease payments owed under the agreements. The bank

automatically debited these payments through the Automated

“° Med f Financial, an affiliated company, was also involved.

l6a

Clearing House process. These transactions took place

entirely within the State of Iowa.

The equipment leased under the agreement with A.C.

Financial was installed in ICCS’s office, and ICCS

experienced problems with the equipment from the outset. In

addition, Med e Fund did not make the lease payments.

Because of these problems, when the bank sent signature

cards to ICCS for the accounts, ICCS did not sign or return

the cards. ICCS sought to resolve difficulties with the bank

through various telephone calls and letters, to no avail.

ICCS brought suit against Med e Fund, Med f

Financial Corp., and A.C. Financial Corp. in Fulton County

Superior Court. The bank was not joined in that action

because negotiations with it were still ongoing. This suit

against the bank was instituted when negotiations failed and

the bank demanded that ICCS make lease payments.

In its complaint, ICCS claimed fraud and conversion,

breach of contract, and sought an accounting, injunctive

relief, and rescission of both agreements. The bank moved to

dismiss on the ground that it was not subject to personal

jurisdiction in Georgia because it did not transact business

here, nor did it regularly do or solicit business or engage in

any other persistent course of conduct here. The trial court

denied the motion but granted a certificate of immediate

review, and we granted this appeal.

Personal jurisdiction of state courts over non-residents

has long been the subject of case law, invoking constitutions

and statutes at both the federal and state levels. The United

States Supreme Court has held that “[a] State generally has a

manifest interest in providing its residents with a convenient

forum for redressing injuries inflicted by out-of-state actors,”

particularly when these actors “purposefully derive benefit

from their interstate activities. [Cits.]” Burger King v.

17a

Rudzewicz, 471 U.S. 462, 473 (105 SC 2174, 85 LEd2d 528)

(1985). But the state’s interest must be bounded by the Due

Process clause of the U.S. Constitution.

[T]he constitutional touchstone remains whether

the defendant purposefully established ‘minimum

contacts’ in the forum State. The unilateral

activity of those who claim some relationship with

a non-resident defendant cannot satisfy the

requirement of contact with the forum State. The

application of that rule will vary with the quality

and nature of the defendant’s activity, but it 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.

Id. at 474-475.

Georgia’s Long Arm statute, OCGA § 9-10-91,

provides in pertinent part:

A court of this state may exercise personal jurisdiction

over any non-resident . . . as to a cause of action

arising from any of the acts, omissions, ownership,

use, Or possession enumerated in this Code section, in

the same manner as if he were a resident of the state,

if in person or through an agent, he

(1) Transacts any business within this state;

(2) Commits a tortious act or omission within

this state, except as to a cause of action for

defamation of character arising from the act;

(3) Commits a tortious injury in this state caused

by an act or omission outside this state if the tort-

18a

feasor regularly does or solicits business, or engages

in any other persistent course of conduct, or derives

substantial revenue from goods used or consumed

or services rendered in this state;

The question we address in this case is whether the

bank’s conduct is covered under any of these three

subsections of OCGA § 9-10-91.

1. We first address whether jurisdiction over the bank

for ICCS’s contract claims is established under subsection (1)

of the Act.

(a) The existence of the bank accounts does not show

that the bank purposefully availed itself of the privilege of

doing business in Georgia. The bank must have purposely

done some act in Georgia to be subject to our courts. Stuart

v. Peykan, Inc., 261 Ga. App. 46, 48(1) (581 SE2d 609)

(2003). The bank’s contacts with Georgia must have been

such that it should have reasonably anticipated that it would

be haled into court here. Id. Here, the bank accounts were

opened by an Iowa resident at an lowa bank. The bank’s only

contacts with Georgia were the exchanged letters and

telephone calls with ICCS regarding the accounts, and mail

and telephone contact alone have been held to be insufficient

to establish the purposeful activity necessary for personal

jurisdiction. Id.

(b) The Act provides that the requisite contacts may

be made by an agent, as well, and ICCS argues that A.C.

Financial was the bank’s agent for purposes of this lawsuit. It

is clear that A.C. Financial, although based in_ lowa,

“transacted business” in Georgia. It solicited ICCS’s business

in this state, and the contracts were signed here. But we

cannot agree with ICCS that A.C. Financial was the bank’s

agent. In support of its motion to dismiss, the bank presented

the affidavits of its president showing that the bank’s

19a

relationship with A.C. Financial was nothing more than that

of bank and customer and that A.C. Financial was not its

agent. ICCS has not presented any evidence to rebut these

sworm statements. The bank’s affidavits denying an agency

relationship cannot be overcome by the bare conclusory

allegation made by ICCS. Coopers & Lybrand vy.

Cocklereece, 157 Ga. App. 240, 245 (2), (276 SE2d 845)

(1981).

(1) of the Act is established because it asserted a right to

rescind the two contracts it entered into with other parties.

But the bank was not a party to either of these contracts, and

it follows that the bank’s conduct is not covered under

subsection (1).

(d) ICCS also argues that the bank’s security interest

in the lease contract constitutes the purposeful conduct

required under the Act. But not one of ICCS’s causes of

action sounding in contract is remotely related to the security

interest taken by the bank, nor has the bank foreclosed its

interest, so as to become a party to the contract. For personal

jurisdiction to be asserted over a non-resident, the litigation

must result from alleged injuries that arose out of the non-

resident’s activities. Stuart, supra, 261 Ga. App. at 48 (1).

We conclude that personal jurisdiction over the bank may not

be asserted under subsection (1) of the Act.

2. The bank also contends that it cannot be subject to

personal jurisdiction in Georgia under subsections (2) and (3)

of the Act, which address tortious conduct. We agree. Under

these subsections, a non-resident may be required to litigate in

a Georgia forum if it has either committed a tortious act

within this state or committed an act or omission outside this

state that causes an injury in this state, but only “if the

tortfeasor regularly does or solicits business, or engages in

any other persistent course of conduct, or derives substantial

20a

revenue from goods used or consumed or services rendered in

this state.” OCGA § 9-10-91(3).

_ The bank’s affidavits also show that the bank “does

not regularly conduct or solicit business in the State of

Georgia; does not engage in any other persistent course of

conduct in the State of Georgia; and does not derive

substantial revenue from goods used or consumed or services

rendered in the State of Georgia.” Even were we to find that

the bank committed a tortious act, it would be subject to

personal jurisdiction only if it regularly does or solicits

business here. The undisputed evidence shows that it does

not.

National Egg Co. v. Bank Leumi le-Israel, 514 FSupp.

- 1125 (N.D. Ga. 1981), relied upon by ICCS, is similar in

some ways to this case. In National Egg Co., the district

court applied Georgia law to find personal jurisdiction under

the Long Arm statute when a bank committed a tort to protect

a security interest. But there, the record showed the bank’s

“intentional contact [with] three Georgia agricultural

companies besides” National Egg Co., as well as the physical

presence in Georgia of a bank vice-president. Id. at 1128.

The district court concluded that because of these additional

contacts, the Act was satisfied and the due process clause of

the U.S. Constitution was not offended. Here, however, no

“additional contacts” are shown by the record, the bank did

not do or solicit business regularly in Georgia, and we

conclude that the requirements of the Act were not satisfied.

Because the record does not show the requisite

minimum contacts, we need not address ICCS’s position that

the bank is subject to personal jurisdiction in Georgia because

of an alleged conspiracy to defraud. We note, however, that

more than a mere allegation of conspiracy with a Georgia

resident is required to support personal jurisdiction under the

2la

Act. Compare Rudo v. Stubbs, 221 Ga. App. 702, 704 (472

SE2d 515) (1996).

3. Finally, we also note that the stated policy of our

courts has long been to interpret the Act so as to exercise

“jurisdiction over non-residents to the maximum extent

permitted by [procedural] due process. [Cit.]” First United

Bank v. First Nat. Bank, 255 Ga. 505, 506, (340 SE2d 597)

(1986); Bradlee Mgmt. Svcs. Inc. v. Cassells, 249 Ga. 614,

617, (292 SE2d 717) (1982); Yukon Partners, Inc. v. Lodge

Keeper Group, Inc. 258 Ga. App. 1, 4, (572 SE2d 647)

(2002). Our Supreme Court attempted to interpret the Act

broadly in Coe & Payne Co. v. Wood-Mosaic Corp., 230 Ga.

58 (195 SE2d 399) (1973) and Clarkson Power Flow v.

Thompson, 244 Ga. 300 (260 S.E.2d 9) (1979). But it is

apparent that since the Supreme Court’s decision in Gust v.

Flint, 257 Ga. 129 (356 SE2d 513) (1987), the decisions of

our courts have consistently adopted a narrower interpretation

of the Act.

In Gust, the Supreme Court refused to enter into a

discussion of the merits of other states’ “rules” governing

minimum contacts, holding unequivocally that “[t]he rule that

controls is our statute, which requires that an out-of-state

defendant must do certain acts within the State of Georgia

before he can be subjected to personal jurisdiction. Where, as

here, it is shown that no such acts were committed, there is no

jurisdiction.” Id. at 130. Subsequent cases have held to the

standard that mail, telephone, or facsimile machine contact

was insufficient to confer personal jurisdiction. See, e.g.,

Stuart, supra; ETS Payphone v. TK Indus., 236 Ga. App. 713,

715 (1), 513 SE2d 257) (1999); Phears v. Doyvne, 220 Ga.

App. 550, 551(1) (470 SE2d 236) (1996).

We agree with some critics that 1f indeed Georgia’s

policy is to exercise jurisdiction over non-residents to the full

extent permitted by due process, given today’s commercial

22a

practices our courts’ interpretations of the Act have not met

its intended and declared policy. Certainly, our decisions

may not provide Georgians who are damaged by non-

residents a forum in this state to the fullest extent permitted

by the due process clause of the U.S. Constitution. As an

intermediate appellate court for the correction of errors,

however, we are bound to follow Gust and its progeny in

finding in this case that mail and telephone contact is

insufficient to satisfy the minimum contact required under the

statute, even in fraud claims. We do not mean to declare that

a broader interpretation of the Act would in this case provide

ICCS with redress for the bank’s actions or omissions. We

hold only that it is clear under binding precedent that because

the bank engaged in contact with ICCS only by mail and

telephone and did not regularly do business in this state,

redress may not be sought in a Georgia court.

Judgment reversed. RUFFIN, P.J., and MILLER, J.,

concur.

23a

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

Innovative Clinical

and Consulting

Services, LLC d/b/a/

Toco Hills Urgent Care,

Civil Action File No.

Plaintiff, 2001CV 46283

First National Bank

of Ames, lowa,

Defendant.

ee ee ee ee

ORDER DENYING MOTION TO DISMISS

Defendant’s Motion to Dismiss on jurisdictional

grounds having come on for a regularly scheduled hearing,

and after hearing arguments of counsel and considering the

record (there being no new evidence introduced at the

hearing), the Court hereby denies said Motion.

This 23 day of December, 2002, nunc pro tunc

November 21, 2002.

a I

iS;

Judge T. Jackson Bedford, Jr.

24a

Prepared by:

Tyler C. Dixon

Raiford & Dixon, LLP

201 Allen Road, Suite 310

Atlanta, Georgia 30325

(404) 847-0860

25a

IN THE SUPERIOR COURT OF FULTON COUNTY

STATE OF GEORGIA

Innovative Clinical

and Consulting

Services, LLC d/b/a/

Toco Hills Urgent Care,

CIVIL ACTION FILE

Plaintiff, NO. 2001CV46283

First National Bank

of Ames, lowa,

Defendant.

ee ee ee ee ee ee ee ee

CERTIFICATE OF IMMEDIATE REVIEW

The Court having entered an Order in this case

denying Defendant First National Bank of Ames, lowa’s

Motion to Dismiss for Lack of Personal Jurisdiction on the

23rd day of December, 2002, nunc pro tunc to Nov. 21, 2002,

which is not subject to direct appeal, it is hereby certified that

the Order denying said Motion, in accordance with the

provisions of O.C.G.A. § 5-6-34(b), is of such importance

that immediate review should be had by the Court of Appeals.

This 23" day of December, 2002.

/s/

T. Jackson Bedford, Jr.

Judge, Fulton Superior Court

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.