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Jurisdiction in Minnesota for Out of State Developers

Before an individual can be called into a particular court, that court must have personal jurisdiction over the person. If you have never had any interactions with the state of Minnesota, for example, a Minnesota court cannot demand that you make an appearance.

When companies are involved, though, the issue of personal jurisdiction can become complicated. Companies do not reside in a single location and often interact with people in a variety of states; complex business structures can lead to difficult questions regarding personal jurisdiction.

Recently, the Minnesota Court of Appeals considered a novel legal situation involving the issue of personal jurisdiction in the context of construction law. In JL Schwieters Construction Inc. v. Goldridge Construction Inc. et al., a Wisconsin-based parent company owned a subsidiary company, which in turn owned real estate in Minnesota. When the subsidiary became unable to pay subcontractors involved in construction on the real property, those subcontractors sued the parent company in Minnesota courts.

The parent company argued that it was not subject to the jurisdiction of Minnesota courts; the Minnesota Court of Appeals disagreed. The court held that the non-resident parent company was treating its subsidiary as an alter ego to conveniently handle business in Minnesota, and therefore the parent company could be subject to the jurisdiction of Minnesota courts under a theory of vicarious personal jurisdiction.

What does this mean for foreign (non-Minnesota) companies conducting business in Minnesota? Essentially, the Minnesota Court of Appeals has made it easier for foreign corporations to be sued in Minnesota based upon the conduct of the foreign corporations’ subsidiaries. If a subsidiary is simply operating as an alter ego for its parent company, that parent company will be responsible for the actions of the subsidiary and can be sued in Minnesota courts.

For more information regarding personal jurisdiction or the other requirements for bringing a lawsuit in Minnesota courts, speak with one of the knowledgeable attorneys at Burns & Hansen, P.A.