Insights

For months, my law school "Civil Procedure" class was one big puzzle to me. The materials might as well have been written in Sanskrit. Week after week, I was in a state of befuddlement about what I was supposed to be learning.

Then one evening, the professor said something (I can't remember what), and the fog lifted. Civil procedure, I realized, was nothing more than a study of the "rules of the road" for lawyers involved in lawsuits. After this realization, the course became, if not easy, at least comprehensible.

One of the most elementary rules of the road that new lawyers learn deals with "jurisdiction." Jurisdiction, as I recall, has a number of dimensions. The first is "subject-matter" jurisdiction - the power of a court to hear disputes of a certain kind. The second is "personal" jurisdiction - the power of a court to entertain a suit against a particular person.

A recent opinion concerning a car dealer who engaged in a sale involving the Internet addresses a personal jurisdiction question arising from the transaction. Here's what happened.

Michelle Chamberlain, an Alabama resident, was interested in a 2008 Ford Mustang located at AutoSource Motors, LLC, a Utah dealership. While living in Alabama, Chamberlain saw the car in an Internet advertisement. The ad offered the car as a rebuilt vehicle with a competitive price.

Chamberlain contacted AutoSource and confirmed that the Mustang was a rebuilt vehicle with a salvage title and that it could be retitled in the state of Alabama. After this confirmation, Chamberlain traveled to the Utah dealership, where she received the same information about the character and titling of the car and bought the Mustang.

When she tried to title the car in Alabama, Chamberlain discovered that the car had a junk title and never could be retitled there. She also discovered that the Mustang was not really a 2008 car but rather an assembly of parts from different years of vehicles.

Chamberlain sued AutoSource in Alabama. In her complaint, Chamberlain argued that Alabama jurisdiction was proper because AutoSource took actions aimed at Alabama citizens by claiming its cars could be titled in Alabama.

AutoSource moved to dismiss. It argued that the court lacked personal jurisdiction because it had so few contacts with the state of Alabama.

AutoSource argued, in part, that it was a Utah-registered company with a principal place of business in Utah, that it owned no property in Alabama and conducted no business there, that it was not registered or licensed to do business in Alabama, and that it was not required to pay taxes in Alabama. The trial court denied the motion, and AutoSource appealed to the Alabama Supreme Court for a writ of mandamus.

The Alabama high court found no evidence of "continuous and systematic" contacts with Alabama given the sole transaction in this case. Therefore, reasoned the court, there were not sufficient contacts to allow general personal jurisdiction under the law. The high court looked to AutoSource's contacts with Alabama in this transaction to see if they rose to a level such that AutoSource would anticipate that it might be brought to court in Alabama. The high court found that an isolated sale of the Mustang and AutoSource telling Chamberlain that she could register the car in Alabama were not enough to establish the minimum contacts necessary to give an Alabama trial court specific personal jurisdiction in this case.

So, the Alabama case against AutoSource was dismissed. AutoSource isn't off the hook, though. Chamberlain can refile her suit in Utah, if she thinks it is worth the time and expense to do so.

Ex parte AutoSource Motors, LLC (In re Chamberlain v. AutoSource Motors, LLC), 2014 Ala. LEXIS 88 (Ala. June 13, 2014).

Thomas B. Hudson is a partner in the Hanover, Maryland office of Hudson Cook, LLP. Tom can be reached at 410-865-5411 or by email at thudson@hudco.com.