Beatrice Foods Co. v. Proctor & Schwartz, Inc.

• Decision Date: 25 February 1983
• Parties: BEATRICE FOODS COMPANY v. PROCTOR & SCHWARTZ, INC. and the Celotex Corporation and Eclipse, Inc. and Easton Wholesale Co., Inc. and James A Hill, T/A James A. Hill, Contractors Appeal of The CELOTEX CORPORATION.
• Court: Pennsylvania Superior Court

Page 646

455 A.2d 646

309 Pa.Super. 351

BEATRICE FOODS COMPANY v. PROCTOR & SCHWARTZ, INC. and the Celotex Corporation and Eclipse, Inc. and Easton Wholesale Co., Inc. and James A Hill, T/A James A. Hill, Contractors

Appeal of The CELOTEX CORPORATION.

Superior Court of Pennsylvania.

Argued May 25, 1982.

Filed Dec. 10, 1982.

Reargument Denied Feb. 25, 1983.

Christopher C. Fallon, Jr., Philadelphia, for Beatrice Foods, appellee.

Louis Evan Bricklin, Philadelphia, for Proctor & Schwartz, et al., appellees.

Before BROSKY, WIEAND and BECK, JJ.

BECK, Judge:

Appellee Beatrice Foods Co. ("Beatrice") is a Delaware corporation with its principal place of business in Chicago, Illinois. Beatrice owns and operates a manufacturing and packaging business in Berlin, Maryland. In June, 1977, a fire broke out in the Berlin plant causing extensive damage to Beatrice's property and business. Beatrice initiated a suit in Philadelphia against two defendants, Proctor & Schwartz, Inc., the manufacturer of the equipment in which the fire allegedly began, and Celotex Corporation ("Celotex"), a Delaware corporation with its principal place of business in Tampa, Florida which supplied the insulation material that allegedly caused the fire to spread rapidly through the plant. Celotex thereafter sought to join James A. Hill, an individual contractor who operates his own business in Delaware, who installed the Celotex insulation material. Celotex also moved to dismiss the suit on the grounds of forum non conveniens. Hill filed preliminary objections challenging the jurisdiction of the Pennsylvania court over him. The court below sustained the preliminary objections of Hill and denied Celotex's motion for dismissal. Celotex now appeals both orders.

Celotex raises two issues on appeal. The first is whether the lower court erred in ruling that Hill is not subject to the jurisdiction of the Pennsylvania court under the Commonwealth's long-arm statute. The second issue is whether the lower court properly refused under the Commonwealth's long-arm statute to dismiss appellee Beatrice's suit against Celotex on the grounds of forum non conveniens.

On the first issue, Celotex argues that Hill, who owns property in Pennsylvania, has brought materials here, and has shipped materials through this state, is therefore subject to the jurisdiction of Pennsylvania under the terms of 42 Pa.C.S. § 5322:

§ 5322. Bases of personal jurisdiction over persons outside this Commonwealth.

(a) General rule.--A tribunal of this Commonwealth may exercise personal jurisdiction over a person (or the personal representative of a deceased individual who would be subject to jurisdiction under this subsection if not deceased) who acts directly or by an agent, as to a cause of action or other matter arising from such person:

(1) Transacting any business in this Commonwealth. Without excluding other acts which may constitute transacting business in this Commonwealth, any of the following shall constitute transacting business for the purpose of this paragraph:

(ii) The doing of a single act in this Commonwealth for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object with the intention of initiating a series of such acts.

(iii) The shipping of merchandise directly or indirectly into or through this Commonwealth.

(iv) The engaging in any business or profession within this Commonwealth, whether or not such business requires license or approval by any government unit of this Commonwealth.

(v) The ownership, use or possession of any real property situate within this Commonwealth.

(b) Exercising of full constitutional power over nonresidents.--In addition to the provisions of subsection (a) the jurisdiction of the tribunals of this Commonwealth shall extend to all persons who are not within the scope of section 5301 (relating to persons) to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States.

(c) Scope of jurisdiction.--When jurisdiction over a person is based solely upon this section, only a cause of action or other matter arising from acts enumerated in subsection (a), or from acts forming the basis of jurisdiction under subsection (b), may be asserted against him.

This Court has held that 42 Pa.C.S. § 5322 makes the exercise of jurisdiction over a non-resident co-extensive with the permissible limits of the due process clause of the Fourteenth Amendment. To determine whether Hill's activities bring him within the reach of our long-arm statute, we have evolved two successive tests. Koenig v. International Brotherhood of Boilermakers, 284 Pa.Super. 558, 426 A.2d 635 (1980). The first step of the analysis is to subject Hill's conduct to the test of Proctor & Schwartz v. Cleveland Lumber Co., 228 Pa.Super. 12, 323 A.2d 11, 15 (1974):

First, the defendant must have purposefully availed itself of the privilege of acting within the forum state thus invoking the benefits and protections of its laws. Hanson v. Denckla, supra, [357 U.S. 235 [78 S.Ct. 1228, 2 L.Ed.2d 1283] (1958) ]. Secondly, the cause of action must arise from defendant's activities within the forum state. See Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374 (6th Cir.1968); Electric Regulator Corp. v. Sterling Extruder Corp., 280 F.Supp. 550 (D.Conn.1968). Lastly, the acts of the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over it reasonable. International Shoe Co. v. Washington, [326 U.S. 310 [66 S.Ct. 154, 90 L.Ed. 95] (1945) ]; see Southern Mach. Co. v. Mohasco Indus., Inc., [401 F.2d 374 (6th Cir.1968) ]; see also In-Flight Devices Corp. v. Van Dusen Air, Inc., 466 F.2d 220 (6th Cir.1972); Kourkene v. American BBR, Inc., 313 F.2d 769 (9th Cir.1963).

Hill lives and operates his contracting business in Delaware, has no place of business within the Commonwealth, and has never undertaken any construction nor supplied any services within Pennsylvania. The cause of action clearly does not arise from Hill's activities within the forum state and the test of Proctor is not met.

If the standards set forth in Proctor are not satisfied, the Court next inquires as to whether the non-resident defendant's activities in Pennsylvania which are unrelated to the cause of action were "continuous and substantial." Bork v. Mills, 458 Pa. 228, 329 A.2d 247 (1974).

The Restatement Conflict of Laws, 2d, 35 states:

"... A state has power to exercise judicial jurisdiction over an individual who does business in the state with respect to causes of action that do not arise from the business done in the state if this business is so continuous and substantial as to make it reasonable for the state to exercise such jurisdiction."

We look now at Hill's contacts with Pennsylvania that are not related to the Maryland fire. Hill concedes that he owns an undeveloped vacation lot in Pennsylvania, that he has occasionally purchased some business machines from Pennsylvania vendors, and that he has in the past used Pennsylvania highways to transport materials, including some used in the Maryland plant (albeit not the Celotex insulation material concerned in the lawsuit). The United States Supreme Court has stated that the concept of "minimum contacts" makes it essential that defendants should be protected against the burdens of litigating in distant and inconvenient forms. States, through their courts, should not reach beyond the limits imposed on them by their status as coequal sovereigns in a federal system. World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), Kingsley and Keith (Canada) Limited v. Mercer Intern. Corp., 291 Pa.Super. 96, 435 A.2d 585 (1981). We conclude that Hill's occasional purchases from Pennsylvania vendors and the use of Pennsylvania highways to transport steel used in the erection...