Budde v. Ling-Temco-Vought, Inc.

• Decision Date: 06 March 1975
• Docket Number: No. 74--1146,LING-TEMCO-VOUGH,INC,74--1146
• Citation: 511 F.2d 1033
• Parties: James Allen BUDDE, Plaintiff-Appellant, v., d/b/a Kentron Hawaii, Ltd., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1033

511 F.2d 1033

James Allen BUDDE, Plaintiff-Appellant, v. LING-TEMCO-VOUGHT, INC., d/b/a Kentron Hawaii, Ltd., et al Defendants-Appellees.

No. 74--1146.

United States Court of Appeals Tenth Circuit.

March 6, 1975.

Edmond R. Eberle, New Orleans, La., for plaintiff-appellant.

Johnson, Paulantis & Lanphere, Albuquerque, N.M., for defendants-appellees.

Before LEWIS, Chief Judge, and HILL and McWILLIAMS, Circuit Judges.

HILL, Circuit Judge.

This appeal results from the trial court's quashing service and dismissing appellant's claim because jurisdiction was lacking.

Appellant Budde was injured on September 27, 1970, in the Republic of South Vietnam, while allegedly a passenger in a jeep driven by Jessie Francis. Appellant claims the accident was caused by Francis' negligent operation of the vehicle. Francis was employed by Kentron Hawaii, Ltd. (Kentron), a subsidiary of LTV Aerospace Corporation (LTV Aerospace), which is a subsidiary of The LTV Corporation (LTV). For many months after the accident, appellant had no recollection of the occurrence. On September 22, 1971, appellant obtained a military accident report which provided some information concerning the accident. On September 27, 1972, appellant filed suit in the Eastern District of Louisiana against Francis, Ling-Temco-Vought, Inc., d/b/a Kentron, and its insurer, Insurance Company of North America. On March 11, 1974, the trial court dismissed that suit because of Louisiana's one-year statute of limitations and the Fifth Circuit affirmed the dismissal. Budde v. Insurance Co. of North America, 502 F.2d 783 (5th Cir. 1974).

Fearing that dismissal and desiring to take advantage of New Mexico's three-year statute of limitations, appellant filed this action on August 6, 1973, ¹ in the United States District Court for the District of New Mexico. Service of process was made on the Corporation Company, the statutory agent for LTV Aerospace. LTV Aerospace does business in New Mexico. The complaint alleges appellant is a Louisiana citizen and appellees are New Mexico citizens. ² On September 4, 1973, appellees entered a special and limited appearance and filed a motion to quash purported service of process on the corporate appellees, to quash issuance of summons as to Francis, and to dismiss the complaint because of lack of jurisdiction over the persons. To support their motion, appellees submitted affidavits which indicate LTV is a Delaware corporation with principal offices in Texas, and Kentron is a Hawaii corporation with principal offices there.

The record of proceedings indicates the court sent a letter dated October 18, 1973, to counsel stating that the case would be dismissed on November 1, 1973, if something was not done on it. On October 29, 1973, appellant requested a 60-day extension to obtain affidavits, interrogatories, depositions, etc., for use in opposing appellees' motions; the trial judge granted a 30-day extension from October 30, 1973. Appellant, on November 30, 1973, filed with the court and mailed to opposing counsel interrogatories concerning the three corporations' inter-relationships. On January 9, 1974, before answers to the interrogatories had been, filed, the trial court granted appellees' motion to quash service and to dismiss the complaint for lack of jurisdiction.

On appeal, appellant contends the district court unjustly and erroneously deprived appellant of discovery which would have shown the court that it had personal jurisdiction over the appellees. When a defendant moves to dismiss for lack of jurisdiction, either party should be allowed discovery on the factual issues raised by that motion. The trial court, however, is vested with broad discretion and should not be reversed unless discretion is abused. H. L. Moore Drug Exch., Inc. v. Smith, Kline & French Labs., 384 F.2d 97 (2nd Cir. 1967).

We do not believe the trial court abused its discretion here. The court had granted appellant 30 additional days to obtain affidavits, interrogatories, depositions, etc.; the court order dismissing the complaint was filed several weeks after the 30-day extension expired. During this period of time, appellant filed and mailed a set of interrogatories and filed a memorandum and addendum in opposition to the appellees' motions. No affidavits were filed; one deposition taken in the Louisiana litigation was attached to the memorandum.

An appellate court will not interfere with the trial court's exercise of its discretion to control its docket and dispatch its business . . . except upon the clearest showing that the procedures have resulted in actual and substantial prejudice to the complaining litigant.

Eli Lilly & Co. v. Generix Drug Sales, Inc., 460 F.2d 1096 (5th Cir. 1972).

We do not feel that the trial court's procedures caused any prejudice to the appellant. Implicit in the trial court's order quashing service and dismissing the complaint for lack of jurisdiction is a determination that further discovery would not demonstrate facts sufficient to constitute a basis for personal jurisdiction in New Mexico over the appellees in this case. Appellant claimed service on LTV Aerospace under New Mexico's foreign corporation process statute ³ provided jurisdiction over LTV and Kentron which were not directly doing business in New Mexico.

The issue presented here can be stated as follows: Would LTV and Kentron (assuming arguendo they were engaging in business in New Mexico under alter ego or agency theories) be subject to process under New Mexico law for a cause of action not arising from the corporation's New Mexico activities? This issue statement recognizes that in diversity cases state law determines whether a corporation is subject to process in the state and federal decisions determine only if the state law is constitutional. Litvak Meat Co. v. Baker,446 F.2d 329 (10th Cir. 1971); Walker v. General Features Corp., 319 F.2d 583 (10th Cir. 1963). The relevant New Mexico statute, N.M.Stat.Ann. § 21--3--6 (1970), ⁴ does not specifically provide that foreign corporations are made subject to process for causes of action not resulting from the corporations' activities in New Mexico; we have not located a New Mexico decision providing a direct answer to the question.

Since Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952), it has been clear that federal due process does not prohibit a state from assuming jurisdiction to enforce a cause of action not arising out of a corporation's activities within the state. The Supreme Court, however, indicated a preferential construction of foreign corporation process statutes which excludes their operation if the cause of action does not arise out of business done by the corporation in the state. E.g., Morris & Co. v. Skandinavia Ins. Co., 279 U.S. 405, 49 S.Ct. 360, 73 L.Ed. 762 (1929); Louisville & N. R.R. v. Chatters, 279 U.S. 320, 49 S.Ct. 329, 73 L.Ed. 711 (1929).

The trial judge apparently determined § 21--3--6 did not extend to causes of action not arising out of business done by the...