Taisho Fire & Marine v. Vessel Montana

• Decision Date: 13 January 1971
• Docket Number: No. C-70 257.,C-70 257.
• Citation: 335 F. Supp. 1238
• Parties: TAISHO FIRE & MARINE et al., Plaintiffs, v. The VESSEL MONTANA et al., Defendants.
• Court: U.S. District Court — Northern District of California

335 F. Supp. 1238

TAISHO FIRE & MARINE et al., Plaintiffs, v. The VESSEL MONTANA et al., Defendants.

No. C-70 257.

United States District Court, N. D. California.

January 13, 1971.

Hall, Henry, Oliver & McReavey, San Francisco, Cal., for plaintiffs.

Hamilton & King, San Francisco, for defendants.

ORDER

PECKHAM, District Judge.

This is an action in admiralty, the gravamen of which is negligence in the design of a stabilization system which malfunctioned on the S.S. Montana's maiden voyage and caused cargo damage. Defendant John J. McMullen Associates, Inc., a New York corporation and the designer of the stabilization system, has moved to dismiss the action as to itself for an alleged lack of personal jurisdiction. McMullen has also moved to dismiss generally for lack of subject matter jurisdiction, claiming that this action is not cognizable in admiralty. This court rejects both arguments and holds that it has both subject matter and personal jurisdiction.

The subject matter jurisdiction contention is clearly meritless. A products liability claim based on faulty design will lie in admiralty court. Schaeffer v. Michigan-Ohio Navig. Co., 416 F. 2d 217, 221 (Sixth Cir. 1969).

The personal jurisdiction issue is more complex. The service of process upon McMullen, a foreign corporation, must be quashed unless there exists a constitutionally and otherwise permissible basis for the assertion of in personam jurisdiction. 2 Moore's Federal Practice 1145. Rule 4(d) of the Federal Rules of Civil Procedure permits the federal courts to look to state law to determine the validity of the assertion of in personam jurisdiction insofar as having a statutory basis for it is concerned. Federal due process requires that the non-resident defendants' contacts with the forum state be sufficient to make fair and reasonable the assertion of jurisdiction over him. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). And in each case, decision will depend on the particular facts involved. Courtesy Chevrolet, Inc. v. Tennessee Walking Horse Breeders' and Exhibitors' Ass'n, 344 F.2d 860 (Ninth Cir. 1965).

The facts in this case point to a valid assertion of jurisdiction over the New York corporation. Service of process was made pursuant to section 411 of the California Code of Civil Procedure and section 6501 of the California Corporation Code—that is, by court order permitting service upon the California Secretary of State. See also Fed.R.Civ.P. 4(e). The facts which support in personam jurisdiction are as follows:

1. John J. McMullen, the sole owner of the corporate defendant, came to San Francisco to discuss a stabilization system for the Montana with the president of States Steamship Company, owner of the then-unbuilt Montana.

2. The existence of John J. McMullen Associates (California) Inc., a California corporation practicing naval architecture and marine engineering. This firm was based in San Francisco and, like the McMullen firm in New York, was wholly-owned by John J. McMullen.

3. The attempts of Charles Whitney, Vice-president of the McMullen California firm, to induce States Steamship to retain the McMullen New York firm (the defendant herein) for the design of the Montana stabilization system.

4. The advertisements which the McMullen New York firm ran in trade journals in circulation in California holding out itself, the New York corporation, as practicing naval architecture in New York and San Francisco.

Considering these facts collectively, there is little doubt that in personam jurisdiction over the New York McMullen firm is authorized by California statute and is consonant with the federal Constitution's due process dictates. The defendant counters that the contract which actually called for the installation of the Montana stabilization system did not call for the system which was offered by Mr. McMullen during his business visit to California and that the cause of action herein does not therefore arise out of California activities. The defendant further contends that personal jurisdiction is improper since the parties to this contract were Avondale Shipyards of New Orleans, the builder of the Montana, and Flume Stabilization Systems, Inc., a New Jersey corporation holding the patents on the desired stabilization system. The contract was not entered into in California, was not performed in California, and the McMullen defendant was not even a party to the contract. These arguments have a superficial appeal, but irresistably sag under closer analysis.

As it has developed, the constitutional test for valid in personam jurisdiction is a realistic, pragmatic test dealing with substance, not shadow. Jurisdiction over a foreign corporation is proper whenever that corporation has certain minimum contacts with the forum state such that the exercise of jurisdiction does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). If, on the facts of a given case, it is fair and reasonable that the defendant be sued in that state...