Bigelow-Sanford, Inc. v. Gunny Corp.

• Decision Date: 06 July 1981
• Docket Number: No. 80-7436,BIGELOW-SANFOR,INC,80-7436
• Citation: 649 F.2d 1060
• Parties: 31 UCC Rep.Serv. 968 , Plaintiff-Appellee, v. The GUNNY CORPORATION, Defendant-Appellant. . Unit B
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1060

649 F.2d 1060

31 UCC Rep.Serv. 968

BIGELOW-SANFORD, INC., Plaintiff-Appellee, v. The GUNNY CORPORATION, Defendant-Appellant.

No. 80-7436.

United States Court of Appeals, Fifth Circuit.

Unit B

July 6, 1981.

Gershon, Ruden, Pindar & Olim, Jay E. Loeb, Atlanta, Ga., for defendant-appellant.

Bouhan, Williams & Levy, Edwin D. Robb, Jr., Savannah, Ga., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before MORGAN, RONEY and KRAVITCH, Circuit Judges.

KRAVITCH, Circuit Judge:

This is a companion case to and involves facts similar to those of American Carpet Mills v. The Gunny Corporation, 5th Cir., 649 F.2d 1056, decided today. ¹ As in American, here Gunny admittedly breached a quarter-year contract with Bigelow-Sanford (Bigelow) for the supply of jute. The jury found in favor of Bigelow, awarding damages and attorney fees. Gunny contends on appeal, inter alia, that the court lacked in personam jurisdiction and venue, that it erroneously charged the jury regarding damages, and that there was insufficient evidence to support the award of attorney fees. We conclude that the district court did not err with respect to these issues and that sufficient evidence supported the attorney fee award. We therefore affirm.

I. Facts

As stated in American:

Gunny, a New York corporation with its principal place of business in New York, employs three persons, two in New York and the third, V. N. Kedia, in Georgia. Kedia, secretary of the corporation, resides in Georgia and oversees Gunny's business in that state, conducting such business out of both his home in Marietta and the offices of Blue Heaven Mills, a separate business entity, in Cartersville. According to testimony given at trial, Kedia is both president of Blue Heaven Mills and the controlling figure in Gunny. Gunny's president, Phillip Raymond, is also associated with Blue Heaven Mills.

Gunny purchases jute in India and ships it to Savannah, where stevedores unload it and place it in transit sheds maintained by the Georgia Ports Authority. Upon instructions from Gunny, the Ports Authority then delivers the jute to the buyer, in this instance American, who arranges for further transportation of the jute. In order to solicit sales of jute to carpet manufacturers in Georgia, Gunny retained as its exclusive agent in the state Crutchfield & Co. of Dalton, Georgia. Drennon Crutchfield, as Gunny's sales agent, ² made such sales on a commission basis, obtaining Kedia's approval of all negotiations. In this manner, Crutchfield negotiated the contract with American sued upon here. (footnote in original)

Bigelow, a South Carolina corporation manufacturing carpet, maintains its principal office in Greenville, South Carolina, a sales office in Atlanta, and two mills elsewhere in Georgia. Following a similar pattern of negotiation as that described in American, in the fall of 1978 it contracted with Gunny for the delivery of 100,000 linear yards of jute at .64 per yard f.o.b. Savannah during the first quarter of 1979. The jute was to be used at its Summerville, Georgia mill. Bigelow executed the contract in South Carolina, Gunny in New York. In January 1979, Gunny delivered 22,228 linear yards to Bigelow in Savannah. The February and March deliveries required under the contract were not made, and Raymond told H. A. Harris, Bigelow's Vice President for Purchasing, that they would not be. In April Gunny delivered eight more rolls to Bigelow. ³ Ultimately, 72,265 linear yards were never delivered.

Bigelow then purchased 164,503 yards of jute on the spot market, replacing jute due under the Gunny contract and those of other vendors. ⁴ The average price paid was $1.21 per linear yard. In making these spot market purchases, Bigelow bought a quantity of jute from Sky Line Products. This jute, some rolls marked "Gunny" and "Bigelow," had been purchased by Sky Line from Blue Heaven Mills through V. N. Kedia. There was also testimony that Gunny, despite strikes in India during late fall 1978 that delayed most jute shipments, had large stores of jute available in Savannah during the first quarter of 1979. Bigelow thus asserts that this evidence, taken cumulatively, indicates that Gunny failed to honor the Bigelow contract in order to capitalize on the delays other jute vendors were experiencing and sell its jute on the highly inflated spot market.

The jury, on special verdicts, found that Gunny had breached its contract, that appellee had purchased jute in good faith in substitution for the jute ordered from Gunny, and that it had saved no expenses as a result of Gunny's default. Using the difference between the contract price and the cost of cover purchases to measure damages, it awarded Bigelow $41,683.11. The jury also found that Gunny had been stubbornly litigious and awarded the corporation attorney fees earlier stipulated as $7,500. Gunny's motions for judgment notwithstanding the verdict or, in the alternative, for a new trial were denied.

Gunny challenges the verdict on the grounds that: 1) the court lacked jurisdiction under the Georgia Long-Arm Statute, 2) the alleged cover purchases should not have been used to measure damages for various reasons including, inter alia, that as they were not in substitution for the contract purchases, were not made seasonably and in good faith, and were not shown to be due to Gunny's breach, and 3) that the court erred in permitting appellee the award of attorney fees.

II. Jurisdiction ⁵

Gunny argues that under the Georgia Long-Arm Act (the Act) the district court lacked in personam jurisdiction in that the contract was neither executed nor breached in Georgia. Our recent decision in Gold Kist, Inc. v. Baskin-Robbins Ice Cream, 623 F.2d 375 (5th Cir. 1980) convinces us that Gunny's argument must fail. Noting that a federal court's assertion of personal jurisdiction over a nonresident defendant must comply both with the long-arm statute of the forum and the basic requirements of the due process clause of the fourteenth amendment, we held that Baskin-Robbins' Georgia contacts conferred such jurisdiction.

The Georgia Long-Arm Act, Ga.Code Ann. § 24-113.1, provides in pertinent part:

A court of this State may exercise personal jurisdiction over any nonresident as to a cause of action arising from any of the acts, omissions, ownership, use of possession enumerated in this section, if in person or through an agent, he:

(a) Transacts any business within this state

In Baskin-Robbins, we pointed to the fact that the Georgia Supreme Court liberally interprets the Georgia Long-Arm Act and that Georgia courts have held that the Act confers jurisdiction over "actions arising either directly or indirectly out of such transactions," id. at 379, and claims arising from or "connected with " (emphasis in Baskin-Robbins) such acts or transactions. From these facts, we concluded that a defendant's activity within Georgia, as long as it was purposeful, could be very slight and yet constitute "transacting business" within the state. Baskin-Robbins' agents had come to Georgia to inspect plaintiff's plant and to conduct preliminary negotiations. Furthermore, part performance had occurred within Georgia. Although we found it unnecessary to address the question of whether any of these contacts standing alone would have been sufficient to sustain jurisdiction, we noted that the Georgia courts had considered each alone to be a relevant contact. Looking to the "totality of circumstances," we held that the Georgia Long-Arm Act, as interpreted by the Georgia courts, conferred in personam jurisdiction over Baskin-Robbins.

Gunny's contacts with Georgia with respect to Bigelow are less than those of Baskin-Robbins in Gold Kist in the sense that neither Gunny agents nor executives met with Bigelow representatives in pre-contract negotiations in Georgia ⁶ nor did execution of the contract occur there. ⁷ But Gunny's contacts are also greater than those of Baskin-Robbins in that it had maintained permanent employees and agents within Georgia and shipped jute through the Savannah ports for more than a decade. Specifically with respect to the instant contract, Gunny had delivered in Savannah 22,228 of the 100,000 linear yards of jute promised. In Gold Kist, we took note of the fact that the Georgia Court of Appeals, in Hollingsworth v. Cunard Line, Ltd., 152 Ga.App. 509, 263 S.E.2d 190 (1979), had recently ruled that "if a nonresident corporation purposely seeks to avail itself of business opportunities in Georgia, the resulting business transactions have the requisite connection with Georgia to sustain jurisdiction, regardless of whether the nonresident itself comes into the state or has agents or independent contractors effect this result." 623 F.2d at 380. In light of this liberal interpretation given the Act by Georgia courts, we conclude that Gunny's actions within Georgia more than met this test: it both employed agents and conducted purposeful activity within Georgia, thus conveying in personam jurisdiction.

The only remaining question in this respect is whether personal jurisdiction over Gunny may be exercised consistent with the dictates of due process. The test is two-pronged: 1) the defendant must have "minimum contacts with the forum state 'such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice' (and 2)) the defendant must 'purposefully (avail) itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.' " Gold Kist at 381. In Gold Kist, we held that by entering into the stream of Georgia commerce, Baskin-Robbins satisfied the latter requirement. The same is true here. With respect to the first requirement, we discussed the general relations between the nature of the claim and the entity's contacts with the forum, recounted in International Shoe Co. v. Washington,...