CADY, Chief Justice.
In this appeal, we must determine whether the exercise of personal jurisdiction over a nonresident defendant to a lawsuit filed in Iowa that alleged misappropriated funds from an Iowa bank account comports with the guarantees of the Due Process Clause of the Fourteenth Amendment. The district court held sufficient minimum contacts were lacking and dismissed the lawsuit. The court of appeals affirmed the decision of the district court. On further review, we reverse the decisions of the court of appeals and the district court and conclude the nonresident defendant is subject to personal jurisdiction in Iowa. We remand the case for further proceedings.
Sona Hassan and Samir Shams are sister and brother. Hassan has been a resident of Maryland for many years and has not visited Iowa since 1983. In 2003, Shams allegedly lived in Iowa. He had two children who resided in Iowa and one child who resided in Arizona.
Shams obtained employment in Iraq in 2003. To provide for his children in his absence, he opened a checking account at Bankers Trust in Des Moines before leaving for Iraq. He planned to use the account to deposit the money he would earn from his employment. Shams claimed Hassan orally agreed to use the account in his absence to provide for the needs of his children and to pay his bills. To carry out the agreement, Shams provided Hassan with checks that could be used to draw on the account. Shams signed the checks as the drawer, but otherwise left the checks blank. Shams delivered the checks to Hassan in Maryland, where she was to negotiate them when needed and mail them to the payee. Shams and Hassan discussed the terms of the agreement over the telephone.
Instead of using the checks to provide for the children as agreed, Shams claimed Hassan used the checks to withdraw funds from the Iowa account for her personal use. Shams alleged Hassan ultimately misappropriated $271,773.93.
Shams filed a lawsuit against Hassan in Iowa district court for breach of contract, conversion, bad faith, fraud, and breach of fiduciary duty. Hassan moved to dismiss for lack of personal jurisdiction. See Iowa R. Civ. P. 1.421(1)(b) (permitting a defendant to make a preanswer motion to dismiss for "[l]ack of jurisdiction over the person"). In her motion to dismiss the lawsuit, Hassan claimed Shams had no meaningful contact with Iowa. She asserted Shams actually resided in Maryland at the time he gave her the checks, after Shams return from Iraq, and as recently
Shams resisted the motion, relying on the purported 2003 agreement, which according to Shams "was to be performed in whole or in part in Iowa, using an Iowa Bank, for Iowa beneficiaries." In Shams's view, the breach of that contract and the attendant claims (conversion, bad faith, breach of a fiduciary duty) necessarily arose out of the agreement and the actions of Hassan in misappropriating funds located in an Iowa bank account. Shams also argued he had substantial ties to Iowa. He claimed he purchased a home in Iowa in 2009 and obtained an Iowa driver's license in 2010.
The district court granted the motion to dismiss. The court reasoned that, even if an agreement was reached, the formation of a contract in Iowa did not justify jurisdiction. Similarly, the court found phone conversations would not be enough to satisfy the due process standard for exercising personal jurisdiction. The court concluded, "The only connection between Ms. Hassan, Iowa, and the cause of action in this case is the fact that the checks were drawn upon an Iowa bank account and [Hassan] may or may not have entered into an oral agreement with [Shams] while he was residing in Iowa." Shams appealed, and we transferred the case to the court of appeals.
The court of appeals affirmed the decision of the district court. It considered the unilateral actions by Shams in opening the Iowa account, making himself the drawer on the account, and providing checks to Hassan in Maryland did not establish purposeful conduct by Hassan with an Iowa resident. Shams sought, and we granted, further review.
We review a district court's decision on a motion to dismiss for lack of personal jurisdiction for correction of errors at law. Addison Ins. Co. v. Knight, Hoppe, Kurnik & Knight, L.L.C., 734 N.W.2d 473, 476 (Iowa 2007); see also Iowa R.App. P. 6.907. We are thus not bound by the district court's conclusions of law or application of legal principles. Ross v. First Sav. Bank of Arlington, 675 N.W.2d 812, 815 (Iowa 2004).
Unlike other grounds for dismissal, however, a court considering a motion to dismiss for lack of personal jurisdiction must make factual findings to determine whether it has personal jurisdiction over the defendant. Capital Promotions, L.L.C. v. Don King Prods., Inc., 756 N.W.2d 828, 832 (Iowa 2008). Those findings are binding if supported by substantial evidence. Hodges v. Hodges, 572 N.W.2d 549, 551 (Iowa 1997).
While the plaintiff has the burden to establish jurisdiction may be had over the defendant, "`we accept as true the allegations of the petition and the contents of uncontroverted affidavits.'" Addison Ins. Co., 734 N.W.2d at 476 (quoting Aquadrill, Inc. v. Envtl. Compliance Consulting Servs., Inc., 558 N.W.2d 391, 392 (Iowa 1997)). After the plaintiff makes a prima facie case showing that personal jurisdiction is appropriate, the burden shifts to the defendant to rebut that showing. State ex rel. Miller v. Internal Energy Mgmt. Corp., 324 N.W.2d 707, 710 (Iowa 1982).
Therefore, a court may constitutionally exercise personal jurisdiction over the nonresident defendant when the defendant has "`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."'" Universal Coops., Inc. v. Tasco, Inc., 300 N.W.2d 139, 143 (Iowa 1981) (quoting Int'l Shoe, 326 U.S. at 316, 66 S.Ct. at 158, 90 L.Ed. at 102). Fairness is the crux of the minimum-contacts analysis. "The minimum contacts must show `a sufficient connection between the defendant and the forum state so as to make it fair' and reasonable to require the defendant to come to the state and defend the action." Ross, 675 N.W.2d at 815 (quoting Hodges, 572 N.W.2d at 551); accord Kulko v. Super. Ct. of Cal., 436 U.S. 84, 91, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132, 141 (1978) ("The existence of personal jurisdiction ... depends upon ... a sufficient connection between the defendant and the forum State to make it fair to require defense of the action in the forum." (Citation omitted.)).
"This test makes it `essential in each case that there be some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Ross, 675 N.W.2d at 815-16 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283, 1298 (1958)). As such, the "`purposeful availment' requirement"
There are two categories of cases in which the defendant's contacts with the forum state are sufficient to make the exercise of personal jurisdiction over them proper. See id. In one group of cases, the defendants maintain "`continuous and systematic'" contacts with the forum state such that they should anticipate defending the suit in the state even when the suit is unrelated to their contacts with the forum state. Helicopteros, 466 U.S. at 414-15, 104 S.Ct. at 1872, 80 L.Ed.2d at 411 (quoting Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 438, 72 S.Ct. 413, 414, 96 L.Ed. 485, 489 (1952)). This first group of cases involves what is known as "general jurisdiction." Capital Promotions, 756 N.W.2d at 833. The parties agree Hassan's contacts with Iowa do not meet this substantial threshold. Therefore, general jurisdiction does not exist over Hassan.
In the second group of cases, jurisdiction is appropriate, even when the defendant's contacts with the forum state are limited, as long as the "controversy is related to or `arises out of a defendant's contacts with the forum." Helicopteros, 466 U.S. at 414, 104 S.Ct. at 1872, 80 L.Ed.2d at 411. A single contact with the forum state can be sufficient to satisfy due process concerns when the plaintiff's claim arises out of the contact. McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223, 226 (1957). For instance, we have upheld the exercise of personal jurisdiction over a nonresident corporation based on one phone call, when the claim — an assertion that the call was harassing and in violation of our consumer credit code — necessarily arose out of the single contact in Iowa. Norton v. Local Loan, 251 N.W.2d 520, 522 (Iowa 1977). The type of jurisdiction in this second group of cases is called "specific jurisdiction," Capital Promotions, 756 N.W.2d at 833, and it forms the heart of the controversy in this case.
When we consider whether an assertion of personal jurisdiction passes constitutional muster in the specific jurisdiction context, "the critical focus is on the relationship among the defendant, the forum and the litigation." Meyers v. Kallestead, 476 N.W.2d 65, 67 (Iowa 1991). Due process is concerned with "the defendant's connection with the litigation in the forum state, not the defendant's connection with residents in that state." In re Marriage of Crew, 549 N.W.2d 527, 530 (Iowa 1996). "The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State." Hanson, 357 U.S. at 253, 78 S.Ct. at 1239-40, 2 L.Ed.2d at 1298. These principles reflect, and are derived from, the constitutional requirement for the defendants to purposefully avail themselves of the privilege of conducting activities in the forum state.
In contrast to cases in which defendants purposefully avail themselves of the protection of a state's laws, the mere foreseeability of causing an injury in another
To be sure, "Calder did not `carve out a special intentional torts exception to the traditional specific jurisdiction analysis.'" Capital Promotions, 756 N.W.2d at 836 (quoting IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 265 (3d Cir. 1998)). "[A] majority of courts have interpreted Calder to require `more than a finding that the harm caused by the defendant's intentional tort is primarily felt within the forum.'" Id. (quoting IMO Indus., Inc., 155 F.3d at 265). "Thus, even under the Calder effects test, `a court must undertake a particularized inquiry as to the extent to which the defendant has purposefully availed itself of the benefits of the forum's laws.'" Id. at 837 (quoting Far W. Capital, Inc. v. Towne, 46 F.3d 1071, 1079 (10th Cir.1995)). A plaintiff attempting to obtain personal jurisdiction under Calder must show:
Id. (quoting Roquette Am., Inc. v. Gerber, 651 N.W.2d 896, 900 (Iowa Ct.App.2002)).
In short, the Calder test permits an intentional tort conducted in another forum to count as a contact within the forum state under certain circumstances. In determining whether the plaintiff has satisfied this test, we look at the location of the tortious activities and the "focal point" of the alleged tort. See id.
In the past, we have utilized an arguably different test from the federal model. We have articulated a five-factor test to evaluate whether a nonresident defendant had sufficient minimum contacts with Iowa. Id. at 833, 104 S.Ct. 1482. The five factors are:
Ross, 675 N.W.2d at 816 (quoting Cascade Lumber Co. v. Edward Rose Bldg. Co., 596 N.W.2d 90, 92 (Iowa 1999)). We have generally considered the first three to be the most important. Cascade Lumber Co., 596 N.W.2d at 92.
Without expressly disavowing our five-factor test, we have followed the modern federal framework more closely in recent years, relying on its two main criteria. Capital Promotions, 756 N.W.2d at 834. The two criteria are (1) whether "`the defendant has "purposefully directed" his activities at residents of the forum,'" and (2) whether "`the litigation results from alleged injures that "arise out of or relate to" those activities.'" Id. (quoting Burger King Corp., 471 U.S. at 472-73, 105 S.Ct. at 2182, 85 L.Ed.2d at 540-41). Nonetheless, our older five-factor test remains a
If sufficient minimum contacts exist, the court must then "`determine whether the assertion of personal jurisdiction would comport with "fair play and substantial justice."'" Id. (quoting Burger King Corp., 471 U.S. at 476, 105 S.Ct. at 2184, 85 L.Ed.2d at 543). In making this latter decision, we consider:
Burger King Corp., 471 U.S. at 477, 105 S.Ct. at 2184, 85 L.Ed.2d at 543 (quoting World-Wide Volkswagen Corp., 444 U.S. at 292, 100 S.Ct. at 564, 62 L.Ed.2d at 498).
"`These considerations sometimes serve to establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required.'" Capital Promotions, 756 N.W.2d at 837 (quoting Burger King Corp., 471 U.S. at 477, 105 S.Ct. at 2184, 85 L.Ed.2d at 543-44). "When minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant." Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 114, 107 S.Ct. 1026, 1033, 94 L.Ed.2d 92, 105-06 (1987). "[W]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King Corp., 471 U.S. at 477, 105 S.Ct. at 2184-85, 85 L.Ed.2d at 544. We are careful, however, to ensure that jurisdictional rules are not employed one way or another to make litigation "`so gravely difficult and inconvenient' that a party unfairly is at a `severe disadvantage' in comparison to his opponent." Id. at 478, 105 S.Ct. at 2185, 85 L.Ed.2d at 544 (quoting M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18, 92 S.Ct. 1907, 1917, 32 L.Ed.2d 513, 525 (1972) (first quoted material); McGee, 355 U.S. at 223, 78 S.Ct. at 201, 2 L.Ed.2d at 226 (second quoted material)).
Broadly speaking, Shams relies on a counterfactual argument: "Had [Hassan] not contacted the Iowa bank by cashing the checks, she would not have accessed the money, she would not have used the money for her personal desires, and the factual basis of this lawsuit would never have arisen." Hassan rejoins that her contacts with Iowa were insignificant. In fact, Hassan argues that no contact with Iowa was purposefully directed at the state. Consequently, she argues, it is unnecessary to consider whether Shams's claim arises out of or is related to contacts she might have with Iowa.
We recognize that checks drawn on an in-state bank are often of "negligible significance" in the determination of whether defendants have purposely availed themselves of Iowa law. See Helicopteros, 466 U.S. at 416, 104 S.Ct. at 1873, 80 L.Ed.2d at 412. Commensurate with the fairness inherent in constitutional personal jurisdiction analysis, most claims ordinarily do not arise out of or relate to the bank account on which the check is drawn or to be deposited. See Twaddle v. Twaddle, 582 N.W.2d 518, 521-22 (Iowa Ct.App.1998) (discussing cases in which funds were either drawn on forum-state banks or to be repaid to accounts in forum-state banks). Consistent with many cases involving a breach of contract, Shams's choice of an Iowa bank account was arguably an irrelevant unilateral contact of the plaintiff. See id. at 522; see also Hanson, 357 U.S. at 253, 78 S.Ct. at 1239-40, 2 L.Ed.2d at 1298.
But, Helicopteros and Twaddle are distinguishable because the checking accounts in both cases were, at most, of passing legal significance. The Houston checking account in Helicopteros was offered as one of several contacts alleged to be continuous and systematic, which — if they were in fact continuous and systematic — would have provided the Texas court with general jurisdiction. See 466 U.S. at 416, 104 S.Ct. at 1872-73, 80 L.Ed.2d at 412. General jurisdiction, of course, would have justified personal jurisdiction even though the claim in Helicopteros was unrelated to the Houston bank account in question. See id. at 415-16, 104 S.Ct. at 1872-73, 80 L.Ed.2d at 411-12. In Twaddle, the bank account was merely incidental to the assertion of specific jurisdiction over the promise the defendant made to repay the plaintiff, an Iowa resident. See 582 N.W.2d at 521-22.
In this case, the contacts by Hassan in allegedly using the Iowa bank account make personal jurisdiction appropriate under the Calder theory we adopted in Capital Promotions. The first prong of the Calder test is easily met. Shams alleged Hassan's acts were intentional. See Capital Promotions, 756 N.W.2d at 837.
The key questions derived from the second and third prongs turn on whether Hassan's actions were "`uniquely or expressly aimed'" at Iowa and whether the harm was felt primarily in Iowa. See id. (quoting Roquette Am., Inc., 651 N.W.2d at 900). With respect to the second prong of the Calder test, Shams argued that since the misappropriation was akin to stealing, Hassan necessarily directed her actions at Iowa. We think our discussion in Capital Promotions of the focal point of the alleged tort is instructive in this case. In Capital Promotions, the defendant's allegedly tortious acts were aimed at a Nevada
This case presents the inverse scenario. While Shams's residence in Iowa is perhaps dubious, it is clear Hassan was aware of the location of the bank from which she was allegedly misappropriating Shams's funds. While Hassan might have preferred the bank account to be located in Maryland, this preference was irrelevant under the Calder test so long as Iowa was the focal point of Hassan's alleged tort. Calder illustrates this conclusion: The harm in that case was directed by the defendant to the forum state. See Calder, 465 U.S. at 788-89, 104 S.Ct. at 1486-87, 79 L.Ed.2d at 812 (describing Calder's allegedly libelous story about Jones and its impact on her in California). Likewise, Hassan knew the bank account was in Iowa, and her alleged acts made Iowa the focal point of her alleged tort. Unlike a case of negligence or ordinary breach of contract, this case allegedly involved the intentional misappropriation of monies known to be in an Iowa bank account. The bank account was the target of the alleged wrong in the case.
Turning to the third prong of the Calder test, the legal injury in a conversion occurs where the conversion takes place. United States v. Swiss Am. Bank, Ltd., 191 F.3d 30, 37 (1st Cir.1999). Thus, wrongful depletion of accounts located in one place occurs in that place. Id.; see also Wenz v. Memery Crystal, 55 F.3d 1503, 1507-08 (10th Cir.1995) (holding conversion of funds in a London bank account by London-based tortfeasors occurred in London). It is true that money is increasingly fungible, and an injury that occurs in one bank account does not mean that the harm is not felt elsewhere. In other words, the economic harm Shams suffered could be viewed as primarily occurring wherever he was located at the moment. But, the point of our formulation of the Calder test was to avoid this type of reasoning, though from the opposite perspective. As we noted in Capital Promotions,
756 N.W.2d at 836 (quoting ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 625-26 (4th Cir.1997)) (alterations in original).
The injury in this case occurred almost totally in Iowa. Not only were funds removed from a bank account located in Iowa, but two of the three children who were to benefit from the funds in the account were residents of Iowa. Of course, the more remote effects of the conversion may also have occurred outside of Iowa. Some of the harm may have caused injury in Arizona because Hassan had allegedly promised to pay bills for one of the children in that state. Yet, our Calder test asks where the primary effect of the tortious act occurred. Thus, injuries occurring elsewhere will not deprive the forum state of personal jurisdiction when the primary effect of the tort occurred in the forum state.
Therefore, sufficient minimum contacts exist to justify the exercise of
Patent Rights Prot. Grp., LLC v. Video Gaming Techs., Inc., 603 F.3d 1364, 1369 (Fed.Cir.2010) (quoting Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1568 (Fed.Cir.1994)).
In reviewing the fairness factors identified in World-Wide Volkswagen Corp., 444 U.S. at 292, 100 S.Ct. at 564, 62 L.Ed.2d at 498, we conclude the exercise of jurisdiction is reasonable. Some burden will undoubtedly fall on Hassan, but such a burden falls on all out-of-state defendants. See Burstein v. State Bar of Cal., 693 F.2d 511, 522 (5th Cir.1982) ("Unquestionably, it would be inconvenient for the Bar to litigate in Louisiana, but that is an aspect of every suit against a nonresident defendant."). Iowa's interest in adjudicating a dispute concerning a tort that incurred within its borders and Shams's interest in obtaining convenient relief outweigh any inconvenience to Hassan. See Asahi Metal, 480 U.S. at 114, 107 S.Ct. at 1033, 94 L.Ed.2d at 105-06 ("When minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant."); see also McGee, 355 U.S. at 223, 78 S.Ct. at 201, 2 L.Ed.2d at 226 ("It cannot be denied that [a state] has a manifest interest in providing effective means of redress for its residents....").
Moreover, some, if not all, of the evidence in this case — bank records — will likely be in Des Moines. See Ellicott Mach. Corp. v. John Holland Party Ltd., 995 F.2d 474, 480 (4th Cir.1993) (holding jurisdiction in Maryland was unreasonable when most of the evidence and witnesses were located in Australia); Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 34 (Minn.1995) (holding jurisdiction was appropriate when the bulk of the relevant evidence was located in Minnesota). Because Hassan is the only defendant in this case, efficiency appears to be satisfied by exercise of jurisdiction in Iowa. See Domtar, Inc., 533 N.W.2d at 34 (considering jurisdiction reasonable when all defendants can be brought before the court to avoid piecemeal litigation); LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 713 N.Y.S.2d 304, 735 N.E.2d 883, 889 (2000) (considering jurisdiction reasonable when all defendants can be brought before the court). Finally, the interest of furthering shared substantive social policies supports the exercise of jurisdiction. The exercise of jurisdiction over a nonresident in this case will serve to discourage nonresidents from converting bank funds.
Accordingly, the exercise of personal jurisdiction does not offend the Due Process Clause in this case. There were sufficient minimum contacts in Iowa. It is fair for Iowa to exercise personal jurisdiction.
Hassan is subject to personal jurisdiction in Iowa under the Calder effects test based on the claim of an intentional tort in
All justices concur except WIGGINS, J., who takes no part.
Iowa R. Civ. P. 1.306. We have interpreted this language as reaching to the widest parameters permitted by the Due Process Clause. Hammond v. Fla. Asset Fin. Corp., 695 N.W.2d 1, 5 (Iowa 2005). Accordingly, we proceed immediately to the constitutional inquiry here.
