CIVIL PROCEDURE CLASS 34`````````````````````` `````` Professor Fischer Columbus School of Law The Catholic University of America November 13, 2002

A BIT OF HISTORY Remember that the Pennoyer case established a strict, formalistic rule of physical presence within the forum before the forum could exercise personal jurisdiction over a defendant. If the defendant was non-resident, there was personal jurisdiction over him if he could be personally served in the state (or, as an exception, if he consented) In rem jurisdiction: another choice

IN REM JURISDICTION What is in rem jurisdiction?

IN REM JURISDICTION Pennoyer v. Neff, the Supreme Court held that a state court could exercise indirect jurisdiction over a nonresident defendant by finding and seizing property that the defendant owned that was located in the state. The attachment of the property amounted to the assertion of the state’s power over property as well as served the purpose of notice to the D

SOVEREIGNTY CONCERNS Under Pennoyer, states only had power to exercise jurisdiction in rem over property located within their borders.

IN REM ACTIONS ARE BROUGHT AGAINST PROPERTY Where action requires the court in the forum state to determine the status of, interests in, or title to property itself. If the property has been attached and thus subjected to the control of the forum, due process doesn’t obligate the court to identify and notify everyone whose interest might be affected by its judgment. In rem judgments are effective against all the world

SOME EXAMPLES Probate proceedings eminent domain confiscation of property registration of title to property ownership of corporate shares declare bankruptcy

QUASI IN REM ACTIONS What’s a quasi in rem action?

QUASI IN REM ACTIONS What’s a quasi in rem action? A quasi in rem action is brought against persons, not property. 2 kinds: 1. Where P seeks to secure a preexisting claim in the property and extinguish other claims in the property (like setting aside a fraudulent conveyance, suit for specific performance of real estate contract)

QUASI IN REM ACTIONS 2. P seeks to get jurisdiction over D’s property within the forum as a SUBSTITUTE for in personam jurisdiction over the D. This is sometimes called “attachment jurisdiction” P is not challenging rights in property itself.

Relation of Property to Claim In Pennoyer the Court did not require that the property that was seized was related to the P’s claim. However, the P could not recover more than the value of the property in an action where there was in rem jurisdiction against the Defendant.

DEFENDANT: SOPHIE’S CHOICE? Once property has been attached as a jurisdictional vehicle,D must choose between 1. General appearance 2. Default judgment and sacrifice of property

PLAINTIFF: ADVANTAGES Puts D to the “Sophie’s choice” described above. The seized property is security for the judgment

PLAINTIFF: DISADVANTAGES OF QUASI IN REM Amount of recovery is limited to value of property Limited res judicata effect - P can bring another claim on same personal claim in the same forum by attaching different property and suing for the difference between amount owed by D and received in first action

PENNOYER, IN REM, AND FAIRNESS Quasi in rem jurisdiction, according tot he Pennoyer Court, was not based on fairness or the D’s contacts with the forum but just the presence of the D’s property with the forum.

QUASI IN REM DOCTRINE GETS STRETCHED TO BREAKING POINT Harris v. Balk - for jurisdictional purposes, the situs of a debt is wherever the debtor is located. This was criticized because it permitted jurisdiction over a D in a forum with which he did not have any logical connection.

Seider v. Roth 2 NY residents that suffered injury in a car accident in VT. NY Court of Appeals (highest state court) found quasi in rem jurisdiction over Canadian D by attaching auto liability insurance policy issued in Canada by a NY insurer. Constitutionality of this procedure was questioned.

Shaffer v. Heitner What is a shareholder derivative action? What was the supposed basis for quasi in rem jurisdiction here? Does the US Supreme Court find quasi in rem jurisdiciton is constitutional?

Shaffer v. Heitner Quasi in rem jurisdiction will satisfy due process only if it meets International Shoe minimum contacts test; presence of property alone is not enough to support the State’s jurisdiction. The result of this is to cause quasi in rem jurisdition to lose its appeal for many Ps.