Burrows Paper Corp. v. R.G. Engineering, Inc.

• Decision Date: 03 March 2005
• Docket Number: No. 6:04-CV-448.,6:04-CV-448.
• Citation: 363 F.Supp.2d 379
• Parties: BURROWS PAPER CORPORATION, Plaintiff v. R.G. ENGINEERING, INC., Defendant.
• Court: U.S. District Court — Northern District of New York

363 F.Supp.2d 379

BURROWS PAPER CORPORATION, Plaintiff v. R.G. ENGINEERING, INC., Defendant.

No. 6:04-CV-448.

United States District Court, N.D. New York.

March 3, 2005.

COPYRIGHT MATERIAL OMITTED

Bond Schoeneck & King, PLLC, Syracuse, NY (Lillian A. Abbott-Pfohl, Thomas Keleher, of counsel), for plaintiff.

Costello, Cooney & Fearon, PLLC, Syracuse, NY (David S. Grasso, of counsel), for defendant.

MEMORANDUM-DECISION and ORDER

HURD, District Judge.

I. INTRODUCTION

On March 22, 2004, plaintiff Burrows Paper Corporation ("Burrows" or "plaintiff") brought an action against defendant R.G. Engineering, Inc. ("RG" or "defendant") claiming breach of contract and breach of warranty. RG filed a motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Burrows opposed the motion and requested that the motion be denied or additional discovery be permitted on the jurisdictional issue. Alternatively, should the motion be granted, Burrows requested that the action be transferred to the Eastern District of Virginia, pursuant to 28 U.S.C. § 1406(a), instead of being dismissed in its entirety. Oral argument was heard on June 22, 2004, in Utica, New York. Decision was reserved.

II. FACTS

As alleged in the complaint, Burrows is a New York Corporation with its principal place of business in Little Falls, New York. RG is a Virginia corporation with its principal place of business in Virginia Beach, Virginia. Although plaintiff alleges that defendant is a press refurbisher, defendant is primarily in the business of selling new equipment manufactured to order and only occasionally engages in the rebuilding or refurbishing of a press.

In the fall of 2002, Burrows considered purchasing a used RG Flexographic printing press (the "press") from non-party Cascade Sunoco. Before purchasing the press, plaintiff contacted the defendant at its offices in Virginia Beach to confirm that it could rebuild the press in order to meet the plaintiff's requirements. Defendant represented to plaintiff that it could do so. On January 7, 2003, plaintiff purchased the press from Cascade Sunoco for $325,000, and subsequently entered into a contract with the defendant to rebuild the press for $450,000. The contract was negotiated and executed solely by telephone and mail contact with plaintiff in New York. Burrows' initial contact with RG was through a telephone call made to Peter Brunett ("Brunett"), an employee of RG, on his Virginia based cellular telephone. At the time of the call, Brunett happened to be in New York. All subsequent discussions between RG and Burrows were conducted, on behalf of RG, from RG's Virginia offices. The contract was embodied by a purchase order that was ultimately drafted by plaintiff in New York. It required the defendant to ship all future billing statements to New York. In fact, all billing statements from the defendant to the plaintiff were sent to the New York headquarters.

On March 18, 2003, the date by which RG was to deliver the rebuilt press, it informed Burrows that further work on the press was necessary. Relying on this communication, plaintiff issued additional purchase orders for $57,000 to RG. In October 2003, defendant completed rebuilding the press at its Virginia Beach plant and shipped it to Burrows Packaging Group, a subsidiary or operating division of Burrows, located in Mt. Vernon, Ohio. Pursuant to the terms of the contract, defendant sent employees to the plant in Ohio to supervise set-up and installation of the press. Plaintiff maintains that the press was not rebuilt properly and, therefore, does not meet its requirements and needs. Ultimately, plaintiff claims that defendant breached its contract and warranty, causing it damages in the amount of approximately $2,000,000.

In support of its contention that jurisdiction may properly be exercised over RG in New York, Burrows alleges that RG has sufficient contacts with New York since it employs a salesperson, Brunett, who lives and works out of New York for much of the year. However, although Brunett does spend time in New York from June through August, he resides in Virginia for the remainder of the year. Moreover, notwithstanding his presence in New York during the summer months, Brunett essentially works out of his Virginia office during that time by telecommunicating to his office in Virginia by cellular telephone and electronic mail. RG does not maintain an office in New York for Brunett.

Additionally, Burrows contends that RG has sold three presses to Graphic Controls, which is located in Buffalo, New York. Further, plaintiff alleges that it is standard industry practice for press refurbishers, such as defendant, to regularly send their employees to repair and maintain their refurbished presses. Defendant refutes this claim by asserting that it only sold one press to Graphic Controls and that it does not send its technicians or other employees into New York on a regular basis, but has only sent them into New York for one day visits on three occasions each in 2002, 2003, and 2004.

III. DISCUSSION

On a Fed.R.Civ.P. 12(b)(2) motion to dismiss for lack of personal jurisdiction, the "plaintiff bears the burden of establishing that the court has jurisdiction over the defendant." Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir.1999) (citing Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir.1994)). A plaintiff may carry this burden" `by pleading in good faith ... legally sufficient allegations of jurisdiction,' i.e., by making a `prima facie showing' of jurisdiction." Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir.1998) (quoting Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990)). In order to make such a showing, a plaintiff may use its "own affidavits and supporting materials, containing an averment of facts that, if credited ... would suffice to establish jurisdiction over the defendant." Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 208 (2d Cir.2001) (internal citations and quotations omitted). Nevertheless, where a defendant "rebuts [a plaintiff's] unsupported allegations with direct, highly specific, testimonial evidence regarding a fact essential to jurisdiction — and [the] plaintiff[] do[es] not counter that evidence — the allegation may be deemed refuted." Schottenstein v. Schottenstein, No. 04 Civ. 5851(SAS), 2004 WL 2534155, at *4 (S.D.N.Y. Nov.8, 2004). However, when "the issue is addressed on affidavits, all allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor." A.I. Trade Fin. v. Petra Bank, 989 F.2d 76, 79-80 (2d Cir.1993).

It is well established that "`[t]he amenability of a foreign corporation to suit in a federal court in a diversity action is determined in accordance with the law of the state where the court sits, with federal law entering the picture only for the purpose of deciding whether a state's assertion of jurisdiction contravenes a constitutional guarantee.'" Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir.1996) (quoting Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir.1963)). When considering a motion to dismiss for lack of personal jurisdiction, the court must undertake a two-part inquiry. "First, it must determine whether the plaintiff has shown that the defendant is amenable to service of process under the forum state's laws; and second, it must assess whether the court's assertion of jurisdiction under these laws comports with the requirements of due process." Id. (citing Savin v. Ranier, 898 F.2d 304, 306 (2d Cir.1990)).

Here, in response to defendant's motion to dismiss for lack of personal jurisdiction, plaintiff relies upon New York Civil Practice and Rules ("CPLR") sections 301 and 302(a)(1) to establish that defendant is subject to jurisdiction in New York.

A. Personal Jurisdiction — CPLR § 301

CPLR section 301 states that "[a] court may exercise such jurisdiction over persons ... as might have been exercised heretofore." This section has been "authoritatively construed to authorize the exercise of jurisdiction over a foreign corporation if the defendant `does business' in New York in the `traditional sense.'" Ball, 902 F.2d at 198 (quoting Frummer v. Hilton Hotels Int'l, Inc., 19 N.Y.2d 533, 536, 281 N.Y.S.2d 41, 227 N.E.2d 851 (N.Y.1967)). This has been interpreted to allow the exercise of jurisdiction under section 301 "only when the defendant is `engaged in such a continuous and systematic course of doing business [in New York] as to warrant a finding of its presence' in the jurisdiction." Id. (quoting Simonson v. Int'l Bank, 14 N.Y.2d 281, 285, 251 N.Y.S.2d 433, 200 N.E.2d 427 (N.Y.1964)). Merely "[o]ccasional or casual business in New York does not suffice under section 301." Id. The plaintiff must show that the defendant is doing business in New York "`with a fair measure of permanence and continuity.'" Id. (quoting Laufer v. Ostrow, 55 N.Y.2d 305, 310, 449 N.Y.S.2d 456, 434 N.E.2d 692 (N.Y.1982)).

New York courts have generally focused on the following indicia of doing business in assessing jurisdiction under this standard: "the existence of an office in New York; the solicitation of business in New York; the presence of bank accounts or other property in New York; and the presence of employees or agents in New York." Landoil Res. Corp. v. Alexander & Alexander Servs., Inc., 918 F.2d 1039, 1043 (2d Cir.1990) (citing Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir.1985)). However, the "`[s]olicitation of business alone will not justify a finding of corporate presence in New York with respect to a foreign manufacturer or purveyor of services.'" Id. (quoting Laufer, 55 N.Y.2d at 310, 449 N.Y.S.2d 456, 434 N.E.2d 692). But "if the solicitation is substantial and continuous, and defendant engages in other activities of...