Charia v. Cigarette Racing Team, Inc.

• Decision Date: 03 November 1978
• Docket Number: No. 76-4199,76-4199
• Parties: Steven J. CHARIA, Plaintiff-Appellant, v. CIGARETTE RACING TEAM, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 184

583 F.2d 184

Steven J. CHARIA, Plaintiff-Appellant, v. CIGARETTE RACING TEAM, INC., Defendant-Appellee.

No. 76-4199.

United States Court of Appeals Fifth Circuit.

Nov. 3, 1978.

Santo A. Dileo, New Orleans, La., for plaintiff-appellant.

William E. Wright, Jr., New Orleans, La., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before RONEY, TJOFLAT and HILL, Circuit Judges.

RONEY, Circuit Judge:

In this Louisiana diversity case, involving the purchase of a boat by a Louisiana resident from a Florida boatbuilder, the issue on appeal is whether the district court erred in dismissing the complaint on the ground there were insufficient "minimum contacts" to justify personal jurisdiction over the Florida boatbuilder under the Louisiana long-arm statute. The facts and contacts in the present case are almost identical to those in Benjamin v. Western Boat Building Corp., 472 F.2d 723 (5th Cir.), Cert. denied, 414 U.S. 830, 94 S.Ct. 60, 38 L.Ed.2d 64 (1973), where we denied Louisiana jurisdiction over a Washington boatbuilder. In Benjamin the "contacts" with Louisiana were the sale of the boat to a Louisiana resident, telephone and mail negotiations between the defendant in Washington and the plaintiff in Louisiana, national advertising, receipt of plaintiff's checks drawn on a Louisiana bank, and the fact that even though plaintiff received the boat in Washington, defendant knew the ship would be home-ported in Louisiana. In the present case there are three alleged "contacts" in addition to those paralleling Benjamin : defendant arranged to ship the boat to defendant in Louisiana via a common carrier, FOB Florida; defendant sold three other boats to Louisiana residents; and plaintiff alleges a personal injury in addition to his contract claim. Holding these additional contacts insufficient to bring about a result different from Benjamin, we affirm the district court's holding that it lacked In personam jurisdiction over defendant Cigarette Racing Team.

Although jurisdiction is asserted under the state long arm statute, here La.Rev.Stat.Ann. § 13:3201 (West 1968 & Supp.1978), ¹ as in Benjamin, we go immediately to a consideration of this case in light of the permissible limits of due process in the exercise of In personam jurisdiction. ²

In the constitutional analysis, the Supreme Court in a trilogy of cases, International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), and McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), has established that due process requires only that defendant have sufficient "minimum contacts" with the forum state to permit the suit to be maintained without offending traditional notions of fair play and substantial justice. While the law has evolved to allow a state to exercise jurisdiction over defendants who have increasingly tenuous contacts with the forum state, in this Circuit Some interconnection between the defendant and the forum state is still required. Since cases of this kind must be judged on their facts, and the court is bound by the precedent of prior opinions, a comparison of the facts of the present case with the facts and holding in Benjamin is appropriate.

Charia Facts

Plaintiff Steven Charia, a resident of New Orleans, Louisiana, saw advertisements which defendant, Cigarette Racing Team, Inc., a Florida boatbuilding corporation, had placed in several national boating magazines. After speaking to other Louisiana residents who had purchased Cigarette boats, plaintiff wrote from Louisiana to Cigarette in Florida, seeking further information. Cigarette replied that the boat could be delivered six weeks after an order was placed, and that a deposit of $3,000 was required, with "the balance due upon completion of the boat F.O.B. factory here in Miami." Along with the reply, Cigarette sent Charia literature about its boats. Subsequently, several telephone conversations took place, some of which were initiated by Cigarette, others by Charia.

While on a business trip to Miami, Florida, Charia visited the Cigarette plant, discussed the boat further with defendant, and verbally agreed to purchase a 28-foot Cigarette boat. He gave Cigarette a check, drawn on a Louisiana bank, for $3,000, the downpayment. No written contract was ever signed by the parties.

Charia returned to Louisiana and had additional telephone conversations with Cigarette about such details as the options to be placed in the boat. He was informed by telephone that the boat was ready and traveled to Florida to check on the boat, only to find out that they were still having some mechanical problems with it. Charia returned to New Orleans. He was notified by telephone a second time that the boat was ready, but when he again traveled to Florida to inspect it, some additional problems were discovered, and he returned home to Louisiana. Several days later, Cigarette notified plaintiff that the problems had been corrected and that the boat was ready and would be delivered as soon as Charia paid the balance due on it. Charia sent Cigarette a check drawn on his Louisiana bank.

Delivery of the boat was then arranged by Cigarette. The boat was shipped FOB Miami, Florida, as the parties had agreed, with the approximately $500 transportation cost of sixty cents per mile added to the cost of the boat. Cigarette arranged for an independent private carrier to take the boat from Florida to Louisiana.

Soon after he received the boat, Charia experienced problems with the boat, and complained to Cigarette of various alleged defects. He wrote numerous letters and telephoned Cigarette for almost a year in an effort to resolve the problems. When Charia realized that Cigarette would do no more, he brought suit against Cigarette. ³ The suit sounded in redhibition under Louisiana law, which is a contract action to set aside a sale because of defects in the thing sold. See La.Civ.Code Ann. art. 2520 (West 1952). His complaint incidentally sought damages for personal injury caused by one of the boat's defects. The district court dismissed for lack of In personam jurisdiction over defendant.

In sum, Cigarette is a Florida corporation which is not qualified to do business in Louisiana and which does not have any office, place of business, employees or agents in Louisiana. Its contacts with Louisiana have been through this sale to Charia and similar sales to three other Louisiana residents. These, then, would have to supply the "minimum contacts" required by constitutional due process.

Benjamin Facts

Benjamin, supra, was also a Louisiana diversity contract case brought by a Louisiana resident (Benjamin) against an out-of-state shipbuilder (Western Boat, a Washington corporation). All negotiations were carried on by mail and telephone. Western Boat sent Benjamin a written contract, which Benjamin signed and returned to Western Boat. Western Boat then signed it in Washington, completing the contract. Benjamin paid for the boat with several checks drawn on a Louisiana bank. When the boat was completed, Benjamin went to Washington to accept the boat and take delivery of it. He then sailed it to San Francisco, from where he shipped it to Louisiana. Western knew the boat's home-port would be in Louisiana.

The Court made clear that these were Western Boat's sole contacts with Louisiana:

(I)t is necessary to understand that these factors constitute the entire sum of Western Boat's contacts with Louisiana. Western Boat (1) is a corporation organized under the laws of Washington, (2) is not qualified to do business in Louisiana, (3) has neither incurred nor paid taxes to Louisiana, (4) has not appointed an agent for service of process in Louisiana, (5) has no office, no place of business, no officers, no agents, no employees, no salesmen, no licensees, no franchisees, and no distributors in Louisiana, (6) has no independent dealers in Louisiana, (7) has no assets in Louisiana, (8) has never advertised in local Louisiana media and is not listed in any Louisiana telephone directories, (9) has never delivered, or arranged to be delivered, a vessel of any kind in Louisiana, (10) has never made a sale to a resident of Louisiana, other than the sale to Benjamin, and (11) has never sent representatives, inspectors, or repair or service personnel to Louisiana. Therefore, Western Boat's Louisiana contacts are limited solely to those contacts generated in the course of the transaction with Benjamin.

Benjamin, supra, 472 F.2d at 729.

The Similarity

It is at once obvious that the facts in the case Sub judice closely parallel those involved in Benjamin. Charia wrote to Cigarette after he saw Cigarette's advertisements in various national boating magazines. Advertisements were also at issue in Benjamin, where we held that "merely advertising in magazines of national circulation that are read in the forum state is not a significant contact for jurisdictional purposes." Benjamin, supra, 472 F.2d at 731.

The preliminary negotiations and communications after Charia agreed to buy the boat and before it was delivered were conducted via the mails and long distance telephone calls. While most of these communications were initiated by Charia, the record clearly shows that at least one letter was sent and some telephone calls were made to Louisiana by Cigarette. The same had occurred in Benjamin, where the written contract was also sent into Louisiana by mail. We stated that "this series of letters and exchange of the contract cannot be characterized as purposeful activity invoking the benefits and protections of Louisiana's law." Benjamin, supra, 472 F.2d at 729.

In the present case, as in Benjamin, plaintiff paid defendant for the boat with checks drawn on Louisiana banks.

In Benjamin, the contract was completed outside Louisiana, and the Court also...