PIERRE, S.D. - South Dakota courts have no jurisdiction over a lawsuit between Kustom Cycles and NASCAR driver Clint Bowyer, according to the South Dakota Supreme Court's reversal of a circuit court ruling.
The underlying lawsuit involves a motorcycle Kustom Cycles built for Bowyer who, in addition to racing in NASCAR's Sprint Cup Series, is also a motorcycle enthusiast.
According to the Supreme Court brief, Bowyer first met Brian Klock, owner of South Dakota-based Kustom Cycles - which does business as Klock Werks - at a NASCAR race in Florida in 2008, then again in Arizona shortly thereafter. Bowyer hired Klock to design a custom motorcycle that would match his 1949 Mercury.
As payment, Bowyer let Klock film the motorcycle driving on the NASCAR track and gave Klock and his friends special access to a Daytona race. Bowyer also attended a four-hour photo shoot and allowed Klock to use his name and likeness for promotional purposes, the opinion said.
Eight months after Bowyer received his motorcycle, he received a bill for over $30,000. Bowyer refused to pay, claiming he had already provided "compensation in the form of the promotions, endorsements, and special access to NASCAR events," the opinion stated.
Bowyer moved to dismiss the ensuing lawsuit for lack of jurisdiction, which the circuit court denied. On appeal, Bowyer argued that he did not have sufficient contact with South Dakota for its courts to have personal jurisdiction over him.
South Dakota's highest court agreed on Wednesday, noting that Bowyer had not engaged in "significant activities" in the state - the contract was negotiated in Florida and Arizona, the motorcycle was purchased in Minnesota and delivered to Bowyer in South Carolina, the justices said.
Klock's argument that Bowyer sent the motorcycle to South Dakota on several occasions did not persuade the five-justice panel, which noted that he had only done so to facilitate Klock's completion of the contract.
Basing South Dakota's jurisdiction over Bowyer on this fact would "potentially place a nonresident defendant in the untenable position of choosing between rejecting noncomforming 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," Justice David Gilbertson wrote for the panel.
Such a situation would place "too much power in the hands of a plaintiff to unilaterally affect the minimum contact analysis," Gilbertson added.
"A proper determination of personal jurisdiction rests on an examination of the defendant's - not the plaintiff's - contacts with the forum," the justice concluded.
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