McHugh v. International Components Corp.

• Decision Date: 16 February 1983
• Citation: 118 Misc.2d 489,461 N.Y.S.2d 166
• Parties: Patrick McHUGH, Plaintiff, v. INTERNATIONAL COMPONENTS CORP., Defendant.
• Court: New York Supreme Court

Page 166

461 N.Y.S.2d 166

118 Misc.2d 489

Patrick McHUGH, Plaintiff, v. INTERNATIONAL COMPONENTS CORP., Defendant.

Supreme Court, Special Term Nassau County, Part 1.

Feb. 16, 1983.

Ford, Marrin, Esposito & Witmeyer, New York City, for second third-party defendant, Marcon Electronics Co., Ltd.

O'Connor & Hayes, P.C., Lynbrook, for second third-party plaintiff International Components Corp.

George Rover, Jericho, for plaintiff Patrick McHugh.

Marshall, Bellofatto & Callahan, Lynbrook, for third-party defendant, Todd Products Corp.

STANLEY HARWOOD, Justice.

It is ordered that this motion by second third-party defendant for summary judgment grounded on lack of jurisdiction is respectfully referred to Special Term, Part II for hearing and determination. Second third-party plaintiff's cross-motion for discovery of jurisdictional facts is granted to the extent indicated.

The main complaint of Patrick McHugh is based on negligence, breach of warranty, and strict products liability; defendant, International Components Corp. (I.C.C.) is charged with selling a defective capacitor to plaintiff's employer, Todd Products Corporation. Plaintiff alleges he sustained injury to his eye on July 25, 1979, while testing a power supply board containing a capacitor which exploded. In the second third-party action, I.C.C. seeks indemnity and/or contribution from second-third party defendant, Marcon Electronics Co., Ltd. (Marcon Japan) claiming that the latter was negligent in designing, manufacturing and shipping the allegedly defective capacitor. I.C.C. also advances the theories of breach of warranty and strict products liability. Marcon Japan, in addition to denying that it manufactured the capacitor in question, raises in its answer as an affirmative defense lack of jurisdiction over its person. On this motion it contends that service was not properly effectuated upon it, and even if it were, this court is without power to exercise jurisdiction over it.

Marcon Japan is a Japanese corporation which has no offices, employees, real property or bank accounts in New York and is not licensed to do business here. I.C.C., a corporation based in Melville, New York, alleges without contradiction that I.C.C. has been selling Marcon Japan's products in the United States since 1973. Copies of letters submitted by I.C.C. indicated that in 1977, these two parties entered into an arrangement whereby I.C.C. was to act as Marcon Japan's representative in this country, although not on an exclusive basis. Other documentation indicates that in 1978, Marcon America Corp. (Marcon America), a wholly owned subsidiary of Marcon Japan was incorporated in the state of Illinois for purposes of distributing the latter's products. I.C.C. does not contend that Marcon America played a part in the design, manufacture or distribution of the capacitor ultimately sold to plaintiff's employer and Marcon America has not been made a party to this action. It is not clear whether I.C.C. claims that Marcon America itself is subject to this court's jurisdiction, but like Marcon Japan, Marcon America has no offices, employees, real property or bank accounts in New York, and it is not licensed to do business here. I.C.C. does assert however, that Marcon America is a "mere instrumentality" of Marcon Japan (see Taca International Airlines, S.A. v. Rolls-Royce of England, Ltd., 15 N.Y.2d 97, 256 N.Y.S.2d 129, 204 N.E.2d 329) and served process in Illinois in November, 1981 on Mr. Thomas Masuda, an officer of Marcon America and its registered agent for process in that state. I.C.C. asserts that this court can exercise jurisdicti over Marcon Japan pursuant to CPLR 302(a)(1) and (3) and that jurisdiction was properly invoked by service in Illinois on its "alter ego", Marcon America.

While recognizing that service on a wholly owned subsidiary which is but a "mere instrumentality" of the parent is valid service on the parent (Taca International Airlines, S.A. v. Rolls-Royce of England, Ltd., supra ; see also ABKCO Industries, Inc. v. Lennon, 52 A.D.2d 435, 384 N.Y.S.2d 781), Marcon Japan asserts through a very brief affidavit of Marcon America's president, that the subsidiary "operates separately and independently from [Marcon Japan]" and that therefore there has been no personal service as required by CPLR 311(1). It also asserts that, as a matter of law, service was defective because it interprets the rule permitting service on a parent corporation by serving a "mere department" subsidiary as applying only where the subsidiary is present in New York. Finally, Marcon Japan claims that there has been no compliance with the "Hague Convention" (the Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil or Commercial Matters 20 UST 361) ratified by both the United States and Japan.

Assuming for the moment that for jurisdictional purposes, Marcon Japan and Marcon America are the same entity (see Bulova Watch Co., Inc. v. K. Hattori & Co.,...