#27019-r-DG

2014 S.D. 87

                              IN THE SUPREME COURT
                                      OF THE
                             STATE OF SOUTH DAKOTA

                                     ****

KUSTOM CYCLES, INC.
d/b/a KLOCK WERKS,                            Plaintiff and Appellee,

      v.

CLINT BOWYER,                                 Defendant and Appellant.

                                     ****

                   APPEAL FROM THE CIRCUIT COURT OF
                      THE FIRST JUDICIAL CIRCUIT
                    DAVISON COUNTY, SOUTH DAKOTA

                                     ****

                    THE HONORABLE PATRICK T. SMITH
                                Judge

                                     ****

JACK THEELER
DUSTIN J. LUDENS of
Morgan Theeler, LLP
Mitchell, South Dakota                        Attorneys for plaintiff
                                              and appellee.

ALEX M. HAGEN
STEVEN W. SANFORD of
Caldwell, Sanford, Deibert
 & Garry, LLP
Sioux Falls, South Dakota                     Attorneys for defendant
                                              and appellant.

                                     ****

                                              ARGUED ON
                                              OCTOBER 7, 2014

                                              OPINION FILED 12/10/14
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GILBERTSON, Chief Justice

[¶1.]        Appellant, Clint Bowyer, appeals the First Judicial Circuit Court’s

denial of his motion to dismiss for lack of personal jurisdiction, pursuant to SDCL

15-6-12(b)(2). Bowyer argues that he does not have sufficient minimum contacts

with South Dakota such that the circuit court could constitutionally assert personal

jurisdiction over him. Bowyer asks this Court to reverse the circuit court’s Order

Denying Bowyer’s Motion to Dismiss and to remand with instructions to dismiss the

Complaint for lack of personal jurisdiction.

                          Facts and Procedural History

[¶2.]        Clint Bowyer is a professional race car driver who races for Michael

Waltrip Racing in NASCAR’s Sprint Cup Series. Bowyer resides in North Carolina

and travels to various states to compete in NASCAR events. Bowyer is also a

motorcycle enthusiast and has attended the motorcycle rally in Sturgis, South

Dakota, on several occasions. Kustom Cycles, Inc., owned by Brian Klock, is a

South Dakota corporation operating in Mitchell, South Dakota. Kustom Cycles

specializes in designing motorcycle parts and the customization of motorcycles.

[¶3.]        Klock and Bowyer first encountered each other at a NASCAR race in

Daytona, Florida, in 2008. Later that fall, around November 9, the two again

encountered one another at a NASCAR track in Phoenix, Arizona. Brook Phillips,

the president of Total Performance, Inc., was present at this meeting. Prior to this

date, Total Performance customized a 1949 Mercury automobile for Bowyer.

Although the parties dispute who originated the idea, the parties agreed that

Kustom Cycles would customize a motorcycle for Bowyer to match his 1949


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Mercury. Bowyer asserts that Klock proposed trading his customization services for

Bowyer’s services in “promotional and endorsement pieces” for Klock and his

vendors, as well as “special NASCAR access” for them.

[¶4.]        Several communications relevant to this case occurred after the

meeting in Phoenix. On November 11, 2008, and January 5, 2009, Phillips sent

pictures of the 1949 Mercury to Kustom Cycles in order to assist Kustom Cycles in

rendering concept images for the proposed customization. On January 2, 2009,

Bowyer purchased a 2009 Harley Davidson motorcycle from a dealership in

Mankato, Minnesota. Bowyer then contacted Kustom Cycles and requested that

Kustom Cycles pick up the motorcycle and transport it to Mitchell for

customization. Several days later, on January 9, 2009, Casey Bowyer—Clint

Bowyer’s brother and alleged agent—contacted Kustom Cycles to approve its

concept images of the proposed customization. Kustom Cycles first delivered the

motorcycle to Bowyer at his home in North Carolina on February 15, 2009.

Apparently Bowyer was not satisfied, and Kustom Cycles returned the motorcycle

to Mitchell for additional modifications. Over one month later, on March 25, 2009,

Casey Bowyer contacted Kustom Cycles and requested pictures of the customized

motorcycle. On April 17, 2009, Kustom Cycles delivered the motorcycle, for a

second time, to Bowyer in North Carolina.

[¶5.]        Meanwhile, Bowyer provided a number of services to Kustom Cycles.

Bowyer arranged special access for Klock and his guests at a NASCAR race in

Daytona, where they met and spoke with Bowyer. At that time, Bowyer also gained

access to the track for Klock, who recorded himself riding the motorcycle onto the


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track for use in promotional materials. Bowyer also attended a four-hour photo

shoot and granted Kustom Cycles permission to use his name and image for

promotional purposes. 1 After Bowyer provided these services, and almost eight

months after Kustom Cycles completed delivery of the motorcycle to Bowyer,

Kustom Cycles sent Bowyer a bill for the work in the amount of $30,788.45. Bowyer

refused to pay the bill, insisting that Klock proposed—and Bowyer performed—

compensation in the form of the promotions, endorsements, and special access to

NASCAR events that Bowyer previously provided.

[¶6.]         On November 12, 2010, Casey Bowyer participated in a telephone

conference with Kustom Cycles in an effort to resolve the billing dispute. This

discussion was unsuccessful, and on November 23, 2011, Kustom Cycles filed a

complaint against Bowyer in South Dakota for payment of the bill. Bowyer moved

the circuit court to dismiss for lack of personal jurisdiction on February 26, 2013.

The circuit court heard arguments on the motion on November 26, 2013. The

circuit judge announced his decision to rule against Bowyer at the hearing and

entered the order denying the motion on January 14, 2014. Although neither party

presented evidence at the hearing, the circuit judge entered findings of fact and

conclusions of law based on the parties’ written submissions. Bowyer filed a

petition for discretionary appeal from the circuit court’s order, which this Court

granted by order of April 4, 2014.




1.      Bowyer’s name and image apparently later appeared on several industry
        magazines and websites in connection with the motorcycle, including the
        cover of the June 2009 issue of NASCAR Illustrated.

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[¶7.]        Bowyer raises two issues in this appeal:

             1.     Whether Bowyer had sufficient minimum contacts to give South
                    Dakota specific jurisdiction over him.

             2.     Whether South Dakota’s assertion of personal jurisdiction over
                    Bowyer violated due process.

                                Standard of Review

[¶8.]        Bowyer’s motion to dismiss under SDCL 15-6-12(b) is a challenge to

the court’s jurisdiction over the person and is a question of law that we review de

novo. Marschke v. Wratislaw, 2007 S.D. 125, ¶ 8, 743 N.W.2d 402, 405. The

ultimate question on review is the same as that on review of a motion for summary

judgment: “[I]s [Bowyer] entitled to judgment as a matter of law?” Id. (quoting

Guthmiller v. Deloitte Touche, LLP, 2005 S.D. 77, ¶ 4, 699 N.W.2d 493, 496)

(internal quotation mark omitted). Although Kustom Cycles—the party seeking to

establish the court’s personal jurisdiction over the defendant—has the burden of

showing a prima facie case of jurisdiction, Epps v. Stewart Info. Servs. Corp., 327

F.3d 642, 647 (8th Cir. 2003), “jurisdiction need not be proved by a preponderance of

the evidence until trial or until the court holds an evidentiary hearing[,]” Dakota

Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991). When

a court does not hold an evidentiary hearing, and instead rests its determination of

personal jurisdiction solely on written submissions, we review that court’s decision

“in the light most favorable to the nonmoving party.” Marschke, 2007 S.D. 125, ¶ 9,

743 N.W.2d at 405 (quoting Daktronics, Inc. v. LBW Tech Co., 2007 S.D. 80, ¶ 3, 737

N.W.2d 413, 416 (quoting Stanton v. St. Jude Medical, Inc., 340 F.3d 690, 693 (8th

Cir. 2003))) (internal quotation mark omitted). In such a case, “[f]or purposes of the

[motion to dismiss], the court must treat as true all facts properly pled in the
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complaint and resolve all doubts in favor of the pleader.” Id. ¶ 8, 743 N.W.2d at 405

(quoting Guthmiller, 2005 S.D. 77, ¶ 4, 699 N.W.2d at 496). Furthermore, when a

court does not make a personal jurisdiction determination on the merits—i.e., does

not conduct an evidentiary hearing—we do not give deference to that court’s factual

findings. See State v. Grand River Enters., Inc., 2008 S.D. 98, ¶ 30, 757 N.W.2d 305,

316. Therefore Kustom Cycles has the burden of establishing a prima facie case for

personal jurisdiction over Bowyer; however, because the circuit court’s

determination was based only on written submissions, we treat Kustom Cycles’s

properly-pleaded, factual allegations as true in our de novo review of the circuit

court’s resolution of Bowyer’s motion to dismiss. 2

                                Analysis and Decision

[¶9.]         In order for a South Dakota court to have personal jurisdiction over a

nonresident defendant, two conditions must be met. “The first inquiry is whether

the legislature granted the court jurisdiction pursuant to South Dakota’s Long Arm

Statute, SDCL 15-7-2.” Daktronics, 2007 S.D. 80, ¶ 4, 737 N.W.2d at 416. Second,

the assertion of jurisdiction must “comport[] with federal due process



2.      It appears the circuit court did not review any evidence other than the
        parties’ written submissions, including several affidavits. Anticipating an
        appeal of its determination, however, the circuit court entered findings of fact
        and conclusions of law. Although such findings may be permitted, they are
        unnecessary on a motion to dismiss, SDCL 15-6-52(a), and as we have
        indicated, are not entitled to deference on review. In this case, the circuit
        court’s findings closely mirror Kustom Cycles’s factual allegations. Therefore
        while the effect of giving deference to the circuit court’s factual findings
        would largely be the same as treating Kustom Cycles’s properly-pleaded,
        factual allegations as true, our treatment of the relevant facts results from
        the application of the standard we have articulated and not from deference
        for the circuit court’s factual findings.

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requirements.” Id. (quoting Denver Truck & Trailer Sales, Inc. v. Design & Bldg.

Servs., Inc., 2002 S.D. 127, ¶ 9, 653 N.W.2d 88, 91) (internal quotation mark

omitted). Bowyer concedes that the reach of South Dakota’s Long-Arm Statute,

SDCL 15-7-2, is coextensive with the constitutional limitations of the Due Process

Clause in this case. Therefore we proceed with the remaining question before us:

Whether the circuit court’s assertion of personal jurisdiction over Bowyer comports

with the Due Process Clause.

[¶10.]       “The Due Process Clause of the Fourteenth Amendment constrains a

State’s authority to bind a nonresident defendant to a judgment of its courts.”

Walden v. Fiore, ___ U.S. ___, 134 S. Ct. 1115, 1121, 188 L. Ed. 2d 12 (2014) (citing

World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S. Ct. 559, 564,

62 L. Ed. 2d 490 (1980)). In order for a judgment to be valid, due process requires a

defendant to have “certain minimum contacts with [the state asserting jurisdiction]

such that the maintenance of the suit does not offend ‘traditional notions of fair play

and substantial justice.’” Int’l Shoe Co. v. Wash., Office of Unemp’t Comp. &

Placement, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945) (quoting

Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 343, 85 L. Ed. 278 (1940)).

Although personal jurisdiction can be general or case-specific, see Fiore, ___ U.S. at

___ n.6, 134 S. Ct. at 1121 n.6, Kustom Cycles relies only on specific jurisdiction in

this case. Therefore we apply a three-step analysis in determining whether a

defendant has minimum contacts sufficient to give South Dakota personal

jurisdiction over that defendant.

             First, the defendant must purposefully avail himself of the
             privilege of acting in the forum state, thus invoking the benefits

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             and protections of its laws. Second, the cause of action must
             arise from [the] defendant’s activities directed at the forum
             state. Finally, the acts of [the] defendant must have substantial
             connection with the forum state to make the exercise of
             jurisdiction over [the] defendant a reasonable one.

Marschke, 2007 S.D. 125, ¶ 15, 743 N.W.2d at 407 (alterations in original) (quoting

Daktronics, 2007 S.D. 80, ¶ 6, 737 N.W.2d at 417). Although Bowyer raised two

issues on appeal—whether minimum contacts exist and whether the assertion of

personal jurisdiction is reasonable in this case—both issues are subsumed in our

three-step analysis. See Daktronics, 2007 S.D. 80, ¶ 6, 737 N.W.2d at 417 (“[W]e

have established a three step test to determine whether minimum contacts exist

and due process is satisfied.”). Compare Burger King Corp. v. Rudzewicz, 471 U.S.

462, 476, 105 S. Ct. 2174, 2184, 85 L. Ed. 2d 528 (1985) (quoting Int’l Shoe Co., 326

U.S. at 320, 66 S. Ct. at 160) (“Once it has been decided that a defendant

purposefully established minimum contacts within the forum State, these contacts

may be considered in light of other factors to determine whether the assertion of

personal jurisdiction would comport with ‘fair play and substantial justice.’”), with

Opp v. Nieuwsma, 458 N.W.2d 352, 355 (S.D. 1990) (“Finally, the acts of defendant

must have substantial connection with the forum state to make the exercise of

jurisdiction over defendant a reasonable one.”). Because we conclude that Kustom

Cycles failed to meet its burden under the first step, we need not discuss the second

or third steps here.

[¶11.]       In support of its assertion that Bowyer purposefully availed himself of

the South Dakota forum, Kustom Cycles principally alleges that Bowyer knew that

Kustom Cycles was a South Dakota entity and that the customization of the


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motorcycle—the performance due from Kustom Cycles under the contract—would

occur in South Dakota, that the contract was formed in South Dakota, that

“numerous communications of Bowyer and his various agents were directed at

South Dakota[,]” and that “Bowyer specifically requested that [the motorcycle] . . .

be transported into South Dakota” on two occasions. We do not agree that these

contacts—taken separately or together—meet the minimum requirements of due

process and, therefore, we reverse.

[¶12.]       We begin by stressing that a proper determination of personal

jurisdiction rests on an examination of the defendant’s—not the plaintiff’s—contacts

with the forum. “The inquiry whether a forum State may assert specific jurisdiction

over a nonresident defendant focuses on the relationship among the defendant, the

forum, and the litigation.” Fiore, ___ U.S. at ___, 134 S. Ct. at 1121 (emphasis

added) (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775, 104 S. Ct.

1473, 1478, 79 L. Ed. 2d 790 (1984)) (internal quotation marks omitted). The

United States Supreme Court has “consistently rejected attempts to satisfy the

defendant-focused ‘minimum contacts’ inquiry by demonstrating contacts between

the plaintiff (or third parties) and the forum State.” Id. at ___, 134 S. Ct. at 1122

(citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417, 104 S.

Ct. 1868, 1873, 80 L. Ed. 2d 404 (1984)). “Put simply, however significant the

plaintiff’s contacts with the forum may be, those contacts cannot be ‘decisive in

determining whether the defendant’s due process rights are violated.’” Id. (quoting

Rush v. Savchuk, 444 U.S. 320, 332, 100 S. Ct. 571, 579, 62 L. Ed. 2d 516 (1980)).

Rather, “it is essential in each case that there be some act by which the defendant


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purposefully avails itself of the privilege of conducting activities within the forum

State, thus invoking the benefits and protections of its laws.” Burger King, 471 U.S.

at 475, 105 S. Ct. at 2183 (emphasis added) (quoting Hanson v. Denckla, 357 U.S.

235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d 1283 (1958)) (internal quotation mark

omitted). Thus, personal jurisdiction is appropriate “where the defendant

‘deliberately’ has engaged in significant activities within a State, or has created

‘continuing obligations’ between himself and residents of the forum[.]” Id. at 475-

76, 105 S. Ct. at 2184 (citation omitted). 3

[¶13.]         a.     Significant activities.

[¶14.]         Bowyer has not engaged in significant activities within South Dakota.

The record suggests the parties negotiated the oral contract at issue in Florida and

Arizona. Although Kustom Cycles claims that the contract was partially negotiated

in South Dakota, it appears that this assertion refers to the communications the

parties exchanged for the purpose of generating and approving a concept image for

the modifications to the motorcycle—not bargaining regarding the essential terms

of the contract. Even if the parties did partially negotiate the contract in South

Dakota, however, we have previously observed that personal jurisdiction over a


3.       Legal practitioners must be aware of the distinction between “contacts” in
         personal-jurisdiction and choice-of-law analyses. While a choice-of-law
         analysis may consider the plaintiff’s relevant contacts with the forum, a
         determination of personal jurisdiction considers only the defendant’s.
         Consequently, even if the location of a plaintiff’s performance “arguably
         might favor application of [South Dakota] law . . . , the fact that [South
         Dakota] may be the center of gravity for choice-of-law purposes does not
         mean that [South Dakota] has personal jurisdiction over the defendant.”
         Kulko v. Super. Ct. of Cal. In and For City and Cnty. of San Francisco, 436
         U.S. 84, 98, 98 S. Ct. 1690, 1700, 56 L. Ed. 2d 132 (1978) (quoting Hanson,
         357 U.S. at 254, 78 S. Ct. at 1240) (internal quotation marks omitted).

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defendant does not vest in a forum simply because the defendant is party to a

contract formed in the forum. See Marschke, 2007 S.D. 125, ¶ 16, 743 N.W.2d at

408 (“[T]he existence of a contract is not dispositive of the issue [of minimum

contacts].”). Similarly, a forum cannot assert personal jurisdiction over an absent,

nonresident defendant simply because the defendant knew the plaintiff was a

resident of the forum, or because the defendant knew the plaintiff’s performance

would occur in the forum. “The [United States Supreme] Court long ago rejected

the notion that personal jurisdiction might turn on [such] ‘mechanical’ tests, or on

‘conceptualistic . . . theories of the place of contracting or of performance[.]’” Burger

King, 471 U.S. at 478-79, 105 S. Ct. at 2185 (third alteration in original) (citations

omitted) (quoting Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 316, 63 S. Ct. 602,

604, 87 L. Ed. 777 (1943)).

[¶15.]         Nor are the communications directed into South Dakota sufficient to

establish jurisdiction in this case. Although Kustom Cycles asserts that Bowyer

and his agents directed “numerous” communications into South Dakota, the

Complaint and written submissions establish only a bare handful of

communications, even when the factual assertions are viewed in a light most

favorable to Kustom Cycles. The only such communication mentioned in the

Complaint is that Bowyer requested that Kustom Cycles arrange transportation for

the motorcycle Bowyer purchased in Mankato. 4 However, Klock alleged several



4.       Although the Complaint claims this request occurred on November 11, 2008,
         this date is contradicted by the Affidavit of Brian Klock, which claims this
         conversation occurred sometime after January 2, 2009—the date Bowyer
         actually purchased the motorcycle.

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additional communications in an affidavit offered to bolster Kustom Cycles’s

resistance to Bowyer’s motion to dismiss. Klock claimed that Phillips—acting as

Bowyer’s agent—sent an email to Kustom Cycles on November 11, 2008, and again

on January 5, 2009. Klock also claimed that, after Kustom Cycles sent concept

images to Bowyer for approval on January 9, 2009, Bowyer responded by telephone

and text messages. Additionally, Casey Bowyer requested progress pictures on

March 25, 2009, following Bowyer’s initial rejection of Kustom Cycles’s first

attempted delivery. Finally, on November 12, 2010—over a year and a half later—

Casey Bowyer participated in a telephone negotiation aimed at obviating the need

for litigation.

[¶16.]        In the past, we have held a comparable number of communications

between parties to be insufficient to establish minimum contacts. See Denver

Truck, 2002 S.D. 127, ¶ 14, 653 N.W.2d at 92. Although there might be slightly

more communications involved in this case than in Denver Truck, we conclude that

the communications involved here are still “more minimal than ‘minimum contacts’

requires.” Id. The circuit court also regarded the weight of these communications

as insufficient. It said, “[I]f it was just a question of emails and telephone calls, we

wouldn’t have jurisdiction anyway.” The communications at issue here do not

establish jurisdiction because they in no way change the quality and nature of

Bowyer’s contact with this forum—this was nothing more than a “one-shot deal.”

See Marschke, 2007 S.D. 125, ¶ 24, 743 N.W.2d at 410.

[¶17.]        Kustom Cycles also argues, and the circuit court found persuasive,

that “[n]ot only once, but twice, Bowyer arranged for the transportation of his


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[motorcycle] . . . into South Dakota.” Although the presence of property within

South Dakota may be relevant, Fiore, ___ U.S. at ___, 134 S. Ct. at 1122 (citing

Keeton, 465 U.S. at 773-74, 104 S. Ct. at 1473) (“[P]hysical entry into the State—

either by the defendant in person or through an agent, goods, mail, or some other

means—is certainly a relevant contact.”), it is not controlling. The United States

Supreme Court has said that “the presence of property in a State may bear on the

existence of jurisdiction by providing contacts among the forum State, the

defendant, and the litigation.” Shaffer v. Heitner, 433 U.S. 186, 207, 97 S. Ct. 2569,

2581, 53 L. Ed. 2d 683 (1977) (emphasis added). However, “the presence of the

property alone would not support the State’s jurisdiction.” Id. at 209, 97 S. Ct. at

2582. Thus, the presence of property within the forum is not required, but neither

is it sufficient, to establish personal jurisdiction over a nonresident defendant.

Instead, the presence of physical property in the forum is significant to the extent

that it affects the quality and nature of the defendant’s connection to the forum.

[¶18.]       We are not persuaded that the mere presence of Bowyer’s motorcycle

in South Dakota constitutes significant activity within this forum. The property is

not present, and the “underlying controversy between the plaintiff and the

defendant” does not arise out of “claims to the property itself[.]” Id. at 207, 97 S. Ct.

at 2581. The absence of the motorcycle from the forum suggests that Bowyer did

not “expect[] to benefit from the State’s protection of his interest.” See id. at 208, 97

S. Ct. at 2581. Similarly, the absence of the motorcycle also negates “[t]he State’s

strong interests in assuring the marketability of property within its borders and in

providing a procedure for peaceful resolution of disputes about the possession of


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that property[.]” See id. (footnote omitted). Although Bowyer asked Kustom Cycles

to transport the motorcycle into South Dakota, the primary—if not only—purpose

for the motorcycle’s presence in this forum was to enable Kustom Cycles to perform

its contractual obligation to Bowyer. Likewise, the purpose for the motorcycle’s

return to this forum was to enable Kustom Cycles to finish performing its

contractual obligation to Bowyer. 5

[¶19.]         Kustom Cycles invites us to count the number of times a product

enters South Dakota and to correspondingly compound the contacts between a

nonresident defendant and this forum—for purposes of asserting personal

jurisdiction—even when all occurrences arise out of the same business transaction.

While this may be appropriate in some cases, we are not convinced that a

consumer’s insistence on complete performance of a commercial services provider’s

contractual obligations necessarily changes the quality or nature of the nonresident

defendant’s relationship with this State. This approach could potentially place a

nonresident defendant in the untenable position of choosing between rejecting

nonconforming goods or services—and thereby risk a heightened chance of being

haled into a foreign jurisdiction—on the one hand, and accepting those goods or

services, despite their nonconformance, on the other. Such a situation would place

too much power in the hands of a plaintiff to unilaterally affect the minimum




5.       The Affidavit of Brian Klock states, “On or about February 17, 2009,
         Defendant test rode the customized motorcycle and requested that Plaintiff
         transport it back to Mitchell, South Dakota for final adjustments and
         alterations.” (Emphasis added.)

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contacts analysis—an analysis meant to be driven by an examination of the

defendant’s acts.

[¶20.]       Even if we were to credit Bowyer with two trips into the forum,

however, the second trip is susceptible of the same criticism as the first: “[T]he

plaintiff cannot be the only link between the defendant and the forum.” Fiore, ___

U.S. at ___, 134 S. Ct. at 1122. Rather, “[d]ue process requires that a defendant be

haled into court in a forum State based on his own affiliation with the State, not

based on the ‘random, fortuitous, or attenuated’ contacts he makes by interacting

with other persons affiliated with the State.” Id. at ___, 134 S. Ct. at 1123 (quoting

Burger King, 471 U.S. at 475, 105 S. Ct. at 2174). The parties met in Florida. The

idea of Kustom Cycles customizing a motorcycle for Bowyer originated in Arizona.

We see nothing in the Complaint or written submissions that suggests Bowyer

sought out a South Dakota customizer of motorcycles and incidentally found

Kustom Cycles; rather, Bowyer met a customizer of motorcycles that, incidentally,

operates in South Dakota. Thus, the motorcycle’s first trip into South Dakota is

nothing more than an attenuated contact resulting from Bowyer’s interaction with

Kustom Cycles, and the second trip is even more attenuated than the first.

[¶21.]       b.     Continuing obligations.

[¶22.]       We are likewise unconvinced that Bowyer created continuing

obligations in South Dakota. However, Kustom Cycles maintains that personal

jurisdiction is appropriate in this case according to our decision in Daktronics. We

summarized the facts of Daktronics in Marschke v. Wratislaw.

             The California defendant entered into a three-year consulting
             contract with a South Dakota corporation for the purpose of
             assisting the corporation’s effort to secure [overseas] contracts.
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             Prior to the agreement, the defendant made telephone calls and
             sent e-mails and faxes to South Dakota. The defendant visited
             the corporation’s headquarters in South Dakota at the
             corporation’s expense. There, the two parties discussed the
             potential business venture. After her South Dakota visit, the
             defendant directed more communications to the corporation in
             South Dakota. Once the agreement was finalized, the defendant
             directed status reports and requests for reimbursement to South
             Dakota. Payments for services and reimbursements were sent
             to the defendant from South Dakota.

2007 S.D. 125, ¶ 20, 743 N.W.2d at 409 (citations omitted). Although the argument

centered on “which party initiated contact or first solicited the other’s business[,]”

id. (citing Daktronics, 2007 S.D. 80, ¶ 10, 737 N.W.2d at 417), we noted that “[i]t is

[ordinarily] not significant that one or the other party initiated the relationship.”

Daktronics, 2007 S.D. 80, ¶ 10, 737 N.W.2d at 418 (alterations in original) (quoting

Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 151 (3d Cir. 2001)) (internal quotation

marks omitted). “Rather, ‘the intention to establish a common venture extending

over a substantial period of time is a more important consideration.’” Id. (quoting

Deutz, 270 F.3d at 151). Thus, we upheld the circuit court’s assertion of personal

jurisdiction over the nonresident defendant because “[p]rovisions of the three-year

contract contemplated continuous contacts between [the defendant] and Daktronics

in South Dakota. Additionally, the contract’s objective was that [the defendant’s]

successful performance of the contract would have a lasting impact on Daktronics’s

South Dakota office[.]” Id. ¶ 14, 737 N.W.2d at 419. The key is that the contract at

issue in Daktronics created a continuing obligation for the defendant in South

Dakota.

[¶23.]       Relying on our decision in Daktronics, Kustom Cycles asserts that “[a]

crucial factor which closely ties the transaction here to the South Dakota forum is

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the place of performance of the contract.” According to Kustom Cycles, “the contract

was for the customization of [Bowyer’s] motorcycle, an act which [sic] occurred

almost exclusively within the forum[.]” Kustom Cycles again confuses the location

of its own performance and obligations with that of Bowyer’s. Nothing in the

Complaint or written submissions suggests that the agreement between the parties

created any continuing obligations in South Dakota for Bowyer. Kustom Cycles

does not dispute Bowyer’s claim that the services he provided to Kustom Cycles

occurred exclusively outside South Dakota. On the other hand, if we are to believe

Kustom Cycles and conclude that the services Bowyer actually rendered were not

consideration for the customization of the motorcycle, and instead conclude that the

only performance due from Bowyer was payment of the invoice—generated months

after delivery of the motorcycle and after Bowyer provided varied services to

Klock—then the duration of Bowyer’s obligation can hardly be considered anything

more than a “one-shot deal.” In relying on Daktronics to assert that personal

jurisdiction over a nonresident defendant is appropriate when the plaintiff’s

contractual obligations occur “almost exclusively” within the forum, Kustom Cycles

ignores our emphasis in Daktronics that the defendant “knew she was entering into

an ongoing relationship with a South Dakota corporation and assuming obligations

that would directly affect the corporation.” Id. ¶ 15, 737 N.W.2d at 419 (emphasis

added). The only obligation in South Dakota that the contract potentially created

for Bowyer, according to Kustom Cycles, was not a continuing obligation like that

displayed in Daktronics.




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[¶24.]       Kustom Cycles’s position is flawed at an even more fundamental level,

however, in emphasizing the distinction between a contract for the sale of goods and

one for services. Kustom Cycles claims that “[a] services contract contemplates a

continued connection between the out-of-state party and the forum” and that

“requesting the performance of services to be provided within the forum gives rise to

a more substantial connection with the forum[.]” While this might be true in some

cases, it is not necessarily so. To the contrary, the United States Supreme Court

has clearly stated that “the ‘minimum contacts’ test of International Shoe is not

susceptible of mechanical application[.]” Kulko v. Super. Ct. of Cal. In and For City

and Cnty. of San Francisco, 436 U.S. 84, 92, 98 S. Ct. 1690, 1697, 56 L. Ed. 2d 132

(1978) (citing Denckla, 357 U.S. at 246, 78 S. Ct. at 1235). If the terms of the

services contract create continuing obligations in the forum for the defendant, such

as in Daktronics, then personal jurisdiction may be appropriate. If so, however, it is

because of the quality and nature of those contacts, not because a services contract

necessarily creates a stronger connection to a forum than a contract for the sale of

goods. To conclude otherwise is essentially to advocate the type of mechanical test

prohibited by the Supreme Court. Although Kustom Cycles may be correct in its

assumption that a contract for services might lead to more contacts, the nature of a

services contract does not inherently command greater consideration in the

minimum contacts analysis. In a case like this, where the only performance due

from the nonresident defendant is a one-time obligation to pay a sum of money,

personal jurisdiction cannot be established by virtue of the duration of the plaintiff’s




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performance of its contractual obligations. To hold otherwise would, again, place

too much power in the hands of the plaintiff to unilaterally affect the minimum

contacts analysis. 6 Although the defendant’s connection to the plaintiff might be

dependent on the length of time required for the plaintiff to complete its

performance, the defendant’s connection to the forum is measured by the

defendant’s own obligations.

                                       Conclusion

[¶25.]         Kustom Cycles misperceives the purpose behind decades of the United

States Supreme Court’s minimum contacts analysis. “Due process limits on the

State’s adjudicative authority principally protect the liberty of the nonresident

defendant—not the convenience of plaintiffs or third parties.” Fiore, ___ U.S. at ___,

134 S. Ct. at 1122 (citing World–Wide Volkswagen, 444 U.S. at 291-92, 100 S. Ct. at

564). Like the United States Supreme Court, we recognize that the determination

of personal jurisdiction “is one in which few answers will be written ‘in black and

white. The greys are dominant and even among them the shades are

innumerable.’” Kulko, 436 U.S. at 92, 98 S. Ct. at 1697 (quoting Estin v. Estin, 334

U.S. 541, 545, 68 S. Ct. 1213, 1216, 92 L. Ed. 1561 (1948)). What is clear, however,

is that the Due Process Clause forbids a state from asserting jurisdiction over a

nonresident defendant when that defendant lacks sufficient contacts with the state,

itself. Neither a nonresident defendant’s contacts with a resident plaintiff, nor a


6.       Hanging personal jurisdiction on the duration of the plaintiff’s performance,
         for example, could potentially allow a plaintiff to establish personal
         jurisdiction simply by delaying the completion of its contractual obligations.
         Such a situation would not only offend due process, it might also encourage
         the violation of contractual obligations.

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resident plaintiff’s contacts with the forum, can compensate for such a deficiency.

Bowyer’s minimal contacts with South Dakota do not amount to substantial

activity, and his agreement with Kustom Cycles did not create continuing

obligations in this forum. Therefore those contacts do not meet the “minimum

contacts” required to satisfy the Due Process Clause. Kustom Cycles did not meet

its burden of establishing a prima facie case of personal jurisdiction over Bowyer,

and the circuit court erred when it denied Bowyer’s motion to dismiss for lack of

personal jurisdiction. Consequently, we reverse.

[¶26.]       KONENKAMP, ZINTER, SEVERSON, and WILBUR, Justices, concur.




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