Opinion
95 Civ. 1622 (JFK).
October 10, 1995
APPEARANCES:
For Plaintiff: Pedro Antonio Garcia, Esq. New York, New York.
For Defendants Press Parts, Inc. and CPT Sales Co.: Condon Forsyth New York, New York, Of Counsel: Stephen R. Stergich, III, Esq.
Rawle Henderson Philadelphia, PA, Of Counsel: Joseph Hamill, Esq. Robert A. Klein, Esq.
OPINION and ORDER
Before the Court is the motion of defendants Press Parts, Inc. and CPT Sales Co. to dismiss Plaintiff's Complaint pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction, and pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim. In the alternative, these Defendants move to transfer this action to the United States District Court for the Northern District of Indiana (South Bend) pursuant to 28 U.S.C. § 1404(a). Plaintiff opposes these motions and cross moves for an order remanding this action to the Supreme Court of New York, Bronx County, pursuant to 28 U.S.C. §§ 1404(a), 1406(a) and 1447.
For the reasons that follow, the motion to dismiss the Complaint against the moving defendants for lack of personal jurisdiction is granted. The motion to transfer is denied as moot. The cross-motion to remand the action, which has not been opposed by the remaining Defendant LJ Press Corp., is granted.
BACKGROUND
This action was originally filed in the Supreme Court of New York, Bronx County. Defendants removed the action to this Court alleging diversity of citizenship jurisdiction, pursuant to 28 U.S.C. § 1332(a)(1).
This action involves claims against Defendants LJ Press Corp. ("LJ"), Press Parts, Inc. ("Press Parts") and CPT Sales Co. ("CPT"), all of which are alleged to have manufactured, distributed, sold and/or placed in the stream of commerce an allegedly defective mechanical clutch power press. Plaintiff alleges that on February 12, 1992, she suffered injuries while operating the press at the direction of her employer. See Complaint ¶ 13. The Complaint alleges claims against each defendant for negligence, breach of warranty and strict products liability.
Plaintiff Darma Gonzalez is a resident of the State of New York. At the time of her injury, plaintiff was employed by Trine Rolled Moulding Corporation ("Trine") as an assembly line worker at Trine's factory in the Bronx, New York.
Defendant Press Parts is a corporation organized under the laws of the State of Indiana and has its principal place of business in Elkhart, Indiana. Press Parts, formed in April of 1991, manufactures and sells spare or component parts for various industrial equipment manufactured by more than thirty different domestic and foreign corporations.
Defendant CPT is also a corporation organized under the laws of the State of Indiana and has its principal place of business in Elkhart, Indiana.
Defendant LJ is also an Indiana Corporation with its principal place of business in Elkhart, Indiana. LJ ceased to do business in 1992.
Plaintiff's motion papers mention a fourth defendant — Press and Shear Machinery Corporation ("Shear"). This defendant was not named in the original Complaint, and as there has been no amendment of that Complaint, the Court will not refer to Shear as a defendant to this action.
According to the Complaint, defendant LJ manufactured the mechanical clutch power press at issue — Model 6 bearing serial number 56294. Plaintiff claims that LJ sold that power press to Trine, where plaintiff was employed as an assembly line worker. On February 12, 1992, at approximately 1:30 p.m., plaintiff alleges that she was severely injured while operating the power press.
The Complaint alleges that Press Parts is the successor corporation to Defendant LJ. See Complaint ¶ 10. The Complaint states that CPT is a fully owned subsidiary of Press Parts. Id. ¶ 8.
DISCUSSION
I. Personal Jurisdiction over Press Parts and CPT
Defendants Press Parts and CPT move to dismiss plaintiff's claims on the ground that this Court lacks personal jurisdiction over them, pursuant to Fed.R.Civ.P. 12(b) (2). Defendants Press Parts and CPT argue that the allegations in the Complaint — that they are successor corporations to LJ — are untrue and therefore this Court lacks jurisdiction over them because of their absence of contact with New York. Plaintiff, on the other hand, argues that Press Parts and CPT are successors to LJ and therefore LJ's past transactions within New York should be imputed to those defendants.
A. Standards under Fed.R.Civ.P. 12(b) (2)
In reviewing a motion to dismiss for lack of personal jurisdiction, the Court must view all pleadings and affidavits in a light most favorable to the plaintiff, resolving any doubt in the plaintiff's favor. See Hoffritz for Cutlery, Inc. v. Amajac Ltd., 763 F.2d 55, 57 (2d Cir. 1985). Prior to discovery, the plaintiff need only establish a prima facie case of personal jurisdiction. See Beacon Enters., Inc. v. Menzies, 715 F.2d 757, 768 (2d Cir. 1983); Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981); Visual Sciences, Inc. v. Integrated Communications, Inc., 660 F.2d 56, 58 (2d Cir. 1981). Plaintiff may not rely on the bare pleadings alone in order to withstand dismissal, however, but rather bears the burden to establish sufficient jurisdictional facts through sworn affidavits or other competent material outside the pleadings.Ball v. Metallurgie Hoboken-Overpelt S.A., 902 F.2d 194, 197 (2d Cir.), cert. denied, 498 U.S. 854 (1990). Given that this Court's subject matter jurisdiction is premised upon diversity, the Court must apply New York law in resolving this personal jurisdiction dispute. See Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963) (en banc).
In order to obtain personal jurisdiction over a defendant in New York, the plaintiff must show that New York authorizes personal jurisdiction pursuant to either section 301 or section 302 of the New York Civil Practice Law and Rules ("NYCPLR"). The plaintiff must also satisfy the constitutional requirements of due process, as set forth in International Shoe Co. v. Washington, 326 U.S. 310 (1945), and its progeny. See id. at 316 (holding that courts gain personal jurisdiction over a non-domiciliary only if that person has "certain minimum contacts [within the state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice'"); Hanson v. Denckla, 357 U.S. 235, 253 (1958) (holding that "minimum contacts" arise where a person acts to avail himself purposefully of the privileges of conducting business within a state, thereby gaining the benefits and protections of its laws).
B. Successor Liability Theory?
As a preliminary matter, plaintiff urges this Court to first determine that Press Parts and CPT are successors to LJ and therefore LJ's contacts with New York can be imputed to Press Parts and CPT. Press Parts and CPT, on the other hand, contend that plaintiff's theory of liability should have no effect on this Court's ability to exercise jurisdiction over them and that their contacts with New York must be assessed individually.
Relying on Calder v. Jones, 465 U.S. 783, 790 (1984), Press Parts and CPT assert that "[e]ach defendant's contacts with the forum State must be assessed individually." Press Parts and CPT argue that this general jurisdictional principle requires that substantive legal precepts of successor liability should be disregarded in an assessment of personal jurisdiction. See, e.g., Witt v. Scully, 539 F.2d 950, 951-52 (3d Cir. 1976) (holding that the "district court erred by confusing substantive legal precepts with jurisdictional ones. The law which must be applied to the issue before us is not the aggregate of legal precepts which substantively may impose liability on a defendant.").
This Court agrees with defendants that the plaintiff's successor liability theory has nothing to do with whether this Court can exercise personal jurisdiction over Press Parts and CPT. This Court therefore need not reach that factual issue and will instead determine whether the conduct of either Press Part or CPT brings it within this Court's jurisdiction. The contacts of LJ to New York are wholly irrelevant to those issues. C. Doing Business in New York — NYCPLR 301
Even if successor liability was relevant to a determination of personal jurisdiction, the Court is not convinced that Press Parts and CPT are successors to the tort liability of LJ.
While it is true that a successor company may be held liable for the torts of its predecessor if the successor is a mere continuation of the predecessor, see Schumacher v. Richards Shear Co., 59 N.Y.2d 239, 451 N.E.2d 195, 464 N.Y.S.2d 437, 440 (1983), that is not the case here. In order for Press Parts and CPT to be mere continuations of LJ, LJ must have ceased to exist when they were formed. See id. Here, LJ continued to sell presses and to operate its business for approximately a year after Press Parts bought some of LJ's assets in April of 1991.See Robert Mathias Affidavit ¶¶ 12-13. As a result, Press Parts cannot be liable for LJ's torts under the "mere continuation" theory of successor liability.
In addition, CPT also is not liable under the "mere continuation" theory of successor liability. Plaintiff alleges that CPT is a subsidiary of Press Parts. As the Court has determined that Press Parts is not liable under this theory, CPT cannot be either.
Plaintiff alternatively urges that this Court can exercise personal jurisdiction over Press Parts and CPT under both NYCPLR sections 301 and 302.
Plaintiff first contends that Press Parts and CPT are subject to in personam jurisdiction because they are "doing business" in New York. As codified in NYCPLR section 301, "doing business" is one of the traditional bases for obtaining personal jurisdiction over a defendant. For a plaintiff to establish that a defendant is doing business in New York, plaintiff must show that defendant continuously and systematically conducts business in New York such that it has a "presence" in New York. See Laufer v. Ostrow, 55 N.Y.2d 305, 309, 449 N.Y.S.2d 456, 458, 434 N.E.2d 692, 695 (1982). This requires more than an occasional or casual connection to the state. See Simonson v. International Bank, 14 N.Y.2d 281, 286, 251 N.Y.S.2d 433, 439, 200 N.E.2d 427, 430 (1964); Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115 N.E. 915, 917 (1917). In addition, solicitation by a non-domiciliary is insufficient in and of itself to establish this presence. See Miller v. Surf Props., Inc., 4 N.Y.2d 475, 480, 151 N.E.2d 874, 876, 176 N.Y.S.2d 318, 321 (1958). Under the "solicitation-plus" test, however, this presence is established when "substantial solicitation" is coupled with one other New York contact of a continuous nature, such as a New York certificate of incorporation, office, bank account, property, or even a telephone number. See Rolls-Royce Motors, Inc. v. Charles Schmitt Co., 657 F. Supp. 1040, 1044 (S.D.N.Y. 1987). Moreover, a foreign corporation, although itself not present in the jurisdiction, may still be found to be doing business in New York through the acts of its agent or representative. See Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116, 120-21 (2d Cir. 1967).
1. Press Parts
According to the affidavit submitted by Robert D. Mathias, III, which directly contradicts the allegations in the Complaint, Press Parts is not a successor to LJ. Rather, Press Parts, LJ and CPT are separate and independent companies. More importantly to this motion, Press Parts does not have an office, a telephone, a bank account, an officer, an agent, or any assets in New York. Nor does Press Parts have any designated agent for the service of process in New York. Press Parts does not pay taxes in New York.
Robert Mathias is the sole shareholder, sole director, sole officer and the president of Press Parts, and has been since the company began doing business in 1991.
Robert Mathias also asserts that Press Parts has not provided services or solicited business in New York and has only satisfied twenty-six unsolicited and irregular purchase orders received by telephone at its sole office in Elkhart, Indiana from 1991 until now. Those sales amount to less than one percent of Press Parts' total sales for those years. None of those purchases required Press Part representatives to be in New York. The parts that were ordered were shipped into New York by independent carriers such as United Parcel Service ("UPS"). Mathias further affirms that Press Parts never serviced or repaired the power press at issue. The vast majority of Press Parts' business is conducted in the mid-western states and in California.
The above very limited contact of Press Parts with New York does not amount to a presence or "doing business" in New York. Plaintiff does not come forward with any evidence to convince this Court otherwise. Plaintiff bases a substantial portion of her argument that this Court has jurisdiction over Press Parts on the irrelevant allegation that Press Parts is a successor to LJ. The above facts, even viewed in a light most favorable to Plaintiff, do not establish that Press Parts was doing business in New York sufficient for this Court to exercise personal jurisdiction over it.
2. CPT
According to the affidavit submitted by Karen Mathias, which directly contradicts the allegations in the Complaint, CPT is not a successor to LJ — it is a wholly separate and independent company. CPT, a machine tool distributorship, has no manufacturing operations. As a distributor, CPT hires different manufacturing companies to manufacture various types of machine tools designed by various different companies for sale to third parties. CPT conducts all of its business through its sales force in the mid-western states. CPT does not have an office, a telephone, a bank account, an officer, an agent, or any assets in New York. Nor does CPT have any designated agent for the service of process in New York. CPT does not pay taxes in New York.
Karen Mathias, wife of Robert Mathias, is the sole shareholder, sole director, sole officer and the president of CPT, and has been since the company was formed in 1992.
Since CPT's formation in 1992, it has not solicited business or provided services in New York. CPT's only contact with New York is one unsolicited purchase order received in its Elkhart office from one New York company. That purchase order, received over the phone, did not require any representative of CPT sales to be present in New York at any time. CPT delivered the goods to the purchaser's carrier in Indiana.
As with Press Parts above, this contact does not rise to the level of CPT doing business in New York. Plaintiff does not come forward with any evidence to convince this Court otherwise. As with Press Parts above, plaintiff bases her entire argument that this Court has jurisdiction over CPT on the allegation that CPT is a subsidiary of Press Parts and Press Parts is a successor to LJ. As mentioned previously, that is irrelevant to this motion. Therefore, this Court is unable to exercise personal jurisdiction over CPT. CPT does not have sufficient presence in New York for this Court to exercise personal jurisdiction over it under the auspices of doing business.
D. Transacting Business in New York — NYCPLR 302
Plaintiff next contends that Press Parts and CPT are subject toin personam jurisdiction because they "transacted business" in New York. As codified in NYCPLR section 302(a) (1), "transacting business" is one of the traditional bases for obtaining personal jurisdiction over a defendant. To establish that a defendant has "transacted business" in New York, Plaintiff must show that the defendant purposefully availed itself of the benefits and protections of the laws of New York. See Liquid Carriers Corp. v. American Marine Corp., 375 F.2d 951, 955-56 (2d Cir. 1967); Feldmuehle North-America v. West End Converters, Inc., 1992 WL 77578, *1 (S.D.N.Y. March 23, 1992); Nee v. HHM Financial Services, Inc., 661 F. Supp. 1180, 1184 (S.D.N.Y. 1987); Bastille Properties, Inc. v. Hometels of America, Inc., 476 F. Supp. 175, 177 (S.D.N.Y. 1979); Longines-Wittnauer Watch Co. v. Barnes Reinecke, Inc., 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965). Four factors are of chief significance in determining whether a defendant has engaged in "purposeful" activity: "1) the physical presence of the defendant in New York; 2) the defendant's execution of a contract in New York; 3) the risk of loss as it affects the New York transaction; and 4) the performance of the contract in New York." See Feldmuehle North-America, 1992 WL 77578, *1 (citing Berk v. Nemetz, 646 F. Supp. 1080, 1084 (S.D.N.Y. 1986)). Additionally, there must be a direct link between the defendant's business activity in the state and the claim being sued upon. See A.I. Trade Finance v. Petra Bank, 1991 WL 33296, *2 (S.D.N.Y. March 7, 1991), rev'd on other grounds, 989 F.2d 76 (2d Cir. 1983) (citing Beacon Enterprises, 715 F.2d at 764).
1. Press Parts
The Court also does not find that it can exercise personal jurisdiction over Press Parts under the transacting business statute. As discussed above, Press Parts has no presence in New York. Neither has it executed any contracts in New York. Press Parts has admittedly satisfied twenty-six unsolicited and irregular purchase orders for parts in New York from 1991 until now. It satisfied those orders by shipping the parts by independent carriers such as UPS. Those orders amount to less than one percent of Press Parts' total sales for those years. Representatives of Press Parts never serviced the parts it shipped to New York.
This minimal contact with New York is not sufficient to establish jurisdiction over Press Parts under the transacting business theory. The above facts, even viewed in a light most favorable to Plaintiff, do not establish that Press Parts was transacting business in New York sufficient for this Court to exercise personal jurisdiction over it.
2. CPT.
The Court also does not find that it can exercise personal jurisdiction over Press Parts under the transacting business statute. As with Press Parts above, CPT has no presence in New York. Neither has it executed any contracts in New York. CPT has admittedly satisfied one unsolicited purchase order from a New York company, but that order was satisfied by CPT delivering the goods to the purchaser's carrier in Indiana. CPT has therefore not transacted sufficient business in New York to subject itself to jurisdiction in this Court.
E. Due Process
Because neither NYCPLR 301 nor NYCPLR 302 grants this Court personal jurisdiction over defendants, the Court need not determine whether an exercise of jurisdiction comports with due process. Press Parts' and CPT's motion to dismiss for lack of personal jurisdiction is granted.
II. Motion to Transfer
As this Court has granted the motion to dismiss for lack of personal jurisdiction, the Court need not consider the motion to transfer and denies that motion as moot.
III. Cross Motion to Remand
Plaintiff cross moves for an order remanding this action to the Supreme Court of the State of New York, Bronx County. As the remaining Defendant LJ does not oppose this motion, the Court will grant the motion to remand.
CONCLUSION
The motion to dismiss the claims against defendants Press Parts and CPT for lack of personal jurisdiction is granted. The motion to transfer is denied as moot.
Plaintiff's cross motion to remand the action to Supreme Court of the State of New York, Bronx County, is grated as to the claims against the remaining defendant LJ.
The Court orders this case closed and directs the Clerk of Court to remove to from the Court's active docket.