RELIABLE TOOL & MACH. v. U-HAUL INTERN.

• Citation: 837 F. Supp. 274
• Decision Date: 10 November 1993
• Docket Number: No. 1:93-CV-106.,1:93-CV-106.
• Parties: RELIABLE TOOL & MACHINE COMPANY, INC., Plaintiff, v. U-HAUL INTERNATIONAL, INC., Defendant.
• Court: U.S. District Court — Northern District of Indiana

837 F. Supp. 274

RELIABLE TOOL & MACHINE COMPANY, INC., Plaintiff, v. U-HAUL INTERNATIONAL, INC., Defendant.

No. 1:93-CV-106.

United States District Court, N.D. Indiana, Fort Wayne Division.

November 10, 1993.

COPYRIGHT MATERIAL OMITTED

Leonard Eilbacher, Kathleen A. Kilar, Hunt Suedhoff Borror and Eilbacher, Fort Wayne, IN, for Reliable Tool & Machine Co., Inc., plaintiff.

Jeffrey L. Gage, Columbia City, IN, Richard M. Amoroso, Phoenix, AZ, for U-Haul Intern., Inc., defendant.

WILLIAM C. LEE, District Judge.

ORDER

This matter is before the court on defendant's Motion to Dismiss pursuant to Fed. R.Civ.P. 12(b)(2) for lack of personal jurisdiction, and defendant's Motion to Transfer Venue in the Alternative. For the following reasons the motions are DENIED.

Procedural Background

On January 28, 1993, U-Haul International, Inc. (hereinafter: UHI) filed a Complaint against Reliable Tool & Machine Company, Inc. (hereinafter: Reliable) in the Superior Court of Arizona, Maricopa County, seeking damages arising out of Reliable's negligence and failure to perform certain obligations pursuant to the U-Haul/Vender agreement executed by the parties. Reliable was served with the Summons and Complaint of the Arizona State Court Action on April 28, 1993. In the interim, and without apparent knowledge of the Arizona Action, Reliable filed the Complaint in the present action against UHI on April 21, 1993. The present action states a claim against UHI for the failure to make payments on its accounts arising out of the U-Haul/Vender agreement. The two actions arise out of the same agreement and the same set of facts.

On May 13, 1993, in the present action, UHI filed its Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(2), or in the Alternative to Stay. Shortly thereafter, on May 16, 1993, Reliable removed the Arizona Action from the Arizona State Court to the United States District Court for the District of Arizona.

In an Order dated June 15, 1993, this court granted UHI's Motion to Stay in the Alternative. Specifically this court held "The court will grant UHI's motion to stay pending a ruling by the Arizona District Court on Reliable's Motion to Transfer. If the Motion to Transfer is granted, the cases will be consolidated in this court." UHI also filed a Reply Brief in Support of Motion to Dismiss and Brief in Support of Alternative Motion to Transfer on June 29, 1993.

The United States District Court for the District of Arizona granted Reliable's Motion to Transfer on September 9, 1993. United States Magistrate Judge Roger B. Cosbey of the Northern District of Indiana lifted the stay in the present action on October 21, 1993. Therefore, the issue of whether this court has personal jurisdiction over UHI is now ripe for decision as is UHI's Motion to Transfer the case to the United States District Court for the District of Arizona. All of the issues have been fully briefed.

Factual Background

UHI is a Nevada corporation with its principal place of business in Phoenix, Arizona. UHI is in the business of renting and selling equipment to the general public for do-it-yourself moving. UHI does not now have nor has it ever had any office or place of business in Indiana. Reliable is an Indiana corporation with its principal place of business in Kendallville, Indiana. Reliable operates a machine shop with approximately one hundred (100) employees. Reliable does not now nor has it ever had any office or place of business in Arizona.

Sometime in the fall of 1991, UHI and Reliable entered into negotiations to have Reliable manufacture replacement hub and axle assemblies for UHI. These negotiations occurred by phone, facsimile and the mails. Sometime during the contract negotiations, Reliable sent two representatives to Arizona in order to facilitate the negotiation process. Concurrent with these negotiations, UHI began sending to Reliable samples, component parts, drawings, prints and instructions detailing the desired product. After various modifications were made as requested by UHI and prototypes reflecting the changes were accepted by UHI, UHI and Reliable entered into a standard, unilaterally drafted U-Haul/Vendor agreement dated March 25, 1992.¹ The agreement drafted by UHI does not specify which state's law is to govern the agreement.

UHI then authorized Reliable to begin the tooling necessary to manufacture the hub and axle assemblies in April and May of 1992. Initially, UHI ordered 7,500 hub assemblies and 7,500 axle assembles. However, Reliable received additional orders from UHI bringing the totals to approximately 15,000 axle assemblies and approximately 30,0000 hub assemblies.

During the course of performance of the agreement, certain problems arose with respect to the products delivered by Reliable. These problems manifested themselves in the months of August, September and November of 1992. U-Haul sent representatives to Reliable in September and December in order to resolve the problems amicably, but were unsuccessful.

Although UHI has made partial payment toward the invoices of Reliable, since January 1993, UHI has been unresponsive to Reliable's demands for payment. There remains an outstanding balance of $905,793.84. UHI asserts that it assumed the responsibility of curing the alleged defects in the assemblies and to date the cost to do so has reached $500,000.00. UHI expects the total cost of repairing all of the allegedly defective parts to exceed one million dollars.

Personal Jurisdiction

Due process requires that a trial court acquire personal jurisdiction over a non-resident defendant before it can render a valid judgment against the defendant. Kulko v. California Superior Court, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978). The due process requirements are that the defendant be given adequate notice of the pending suit, Mullane v. Central Hanover Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), and that the defendant be subject to the personal jurisdiction of the court, International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

Before a court can exercise personal jurisdiction over a non-resident defendant, it must determine that "minimum contacts" exist between the forum state and the non-resident defendant which comport with due process. Asahi Metal Ind. v. Super. Ct. of Cal., Solano Cty., 480 U.S. 102, 107, 107 S.Ct. 1026, 1030, 94 L.Ed.2d 92 (1987). The test is essentially a determination by the forum court as to whether it is reasonable, due to the non-resident defendant's conduct in connection with the forum state, for the non-resident defendant to anticipate being haled into court in the forum state. World Wide Volkswagen v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1985). A further inquiry is whether the non-resident defendant purposefully availed himself or itself of the privilege of conducting activities within the forum state. Burger King Corporation v. Rudzewicz, 471 U.S. 462, 473, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528. In order to determine whether minimum contacts exist, the court must focus on the quantity, quality, and nature of the defendant's activities, together with the relationship of those activities and the forum state. International Steel Co. v. Charter Builders, Inc., 585 F.Supp. 816, 820-21, (S.D.Ind.1984), citing, Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980). The test for minimum contacts is flexible and necessarily dependent upon the facts of each case with particular attention to the nature and quality of the contacts. Lakeside Bridge & Steel Co. v. Mountain State Construction Co., 597 F.2d 596 (7th Cir.1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980); W & W Farms, Inc. v. Chartered Systems Corp., 542 F.Supp. 56 (N.D.Ill.1982).

For this court to decide that it has personal jurisdiction over a non-resident defendant, the court must be shown "those affiliating circumstances that are a necessary predicate to any exercise of state court jurisdiction." World Wide Volkswagen, 444 U.S. at 294, 100 S.Ct. at 566. "Unilateral activity of those who claim some relationship with a non-resident defendant cannot satisfy the requirement of contact with the forum state." Hanson v. Denckla, 357 U.S. 235, 251-54, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958).

Once the court has determined that minimum contacts exist, "these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with `traditional notions of fair play and substantial justice.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2184, 85 L.Ed.2d 528 (1985), quoting Milliken v. Meyer, 311 U.S. 457, 461, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940). In Burger King, the Supreme Court outlined the factors that are to be considered when determining whether the exercise of personal jurisdiction comports with fair play and substantial justice: (1) the burden on the defendant, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the states in furthering substantive social policies. Id. at 462, 105 S.Ct. at 2184.

Where a federal court asserts jurisdiction pursuant to the Diversity Statute, 28 U.S.C. § 1332, the court acquires personal jurisdiction over a non-resident defendant in accordance with the long-arm statute of the state in which it sits. Scott Turnock v. Cope, 816 F.2d 332, 334 (7th Cir.1987); Lakeside Bridge & Steel Co., Inc., v. Mountain Side Construction Co., Inc., 597 F.2d 596 (7th Cir.1979); Casad Ry. Services, Inc. v. Union Pacific R. Co., 659 F.Supp. 123 (N.D.Ind. 1987). In Indiana, the long-arm statute is set forth in Trial Rule 4.4(A), and it provides in pertinent part:

(A) Acts serving as a basis for

...