China Exp., Inc. v. Volpi & Son Mach. Corp.

• Citation: 513 N.Y.S.2d 388,126 A.D.2d 239
• Court: New York Supreme Court Appellate Division
• Decision Date: 24 March 1987
• Parties: CHINA EXPRESS, INC., Plaintiff-Appellant, v. VOLPI & SON MACHINE CORP., Defendant-Respondent.

Page 388

513 N.Y.S.2d 388

126 A.D.2d 239

CHINA EXPRESS, INC., Plaintiff-Appellant, v. VOLPI & SON MACHINE CORP., Defendant-Respondent.

Supreme Court, Appellate Division First Department.

March 24, 1987.

Samuel A. Abady, of counsel (Matthew G. Dineen with him on the brief; Abady & Jaffe, New York City, attorneys) for plaintiff-appellant.

Anthony P. Gallo, of counsel (Gallo & Buonora, Commack, attorneys) for defendant-respondent.

Before SANDLER, J.P., and SULLIVAN, CARRO and ELLERIN, JJ.

SULLIVAN, Justice.

China Express, Inc., an Arizona corporation engaged in the manufacture and sale of Oriental foodstuffs, sued Volpi & Son Machine Corp., a New York corporation not qualified to do business in Arizona, in the Superior Court of Arizona for breach of contract and fraudulent conversion arising out of Volpi & Son's failure to deliver a noodle processing machine and to refund the $8,000 which China Express had paid toward its purchase price. The summons and complaint were served by registered mail, and Volpi & Son failed to appear or answer. After inquest, the Arizona court entered a judgment against it in the sum of $43,814.26.

China Express then commenced this action on the Arizona judgment and, pursuant to CPLR 3213, moved for accelerated judgment in lieu of complaint. Volpi & Son responded by arguing that the judgment was not entitled to full faith and credit since the Arizona court had lacked jurisdiction over it. Special Term held the motion in abeyance and referred the matter to a special referee to hear and report with a recommendation on the issue of whether Volpi & Son's contacts with the State of Arizona were sufficient to subject it to long-arm jurisdiction. The following recital of the facts is taken from the transcript of that hearing.

China Express first contacted Volpi & Son in New York sometime in November or December, 1982 when Tony Lee, its president, called to inquire about the availability of a machine that would process an egg roll wrap and Oriental noodle. Volpi & Son's Vice-President, Joseph Volpi, told Lee that he would be attending a trade show in Phoenix in February, 1983, and could be contacted there to discuss the matter.

It is undisputed that in February, 1983 Lee met Volpi at a trade show in Phoenix where Volpi was exhibiting pasta machines for Pasta World, Inc., another company in which he had a financial interest. Although Volpi did not have the particular type of processing machine with him, the two met later at a restaurant and discussed, inter alia, the specifications for such a machine, which Volpi schematically drew on a pad, and the price, including the terms of payment for various pieces of machinery, some new and some used, which Volpi said he could obtain. ¹ In Volpi's notes of that meeting reference was made to a "Volpi mini-cutter/folder with 4 cuts" and a "mini-noodle cutter 4 cuts $35,000", terms which closely characterize the machine ultimately described in a written contract prepared by Volpi & Son.

It is also undisputed that the parties did not conclude their negotiations at the meeting in Phoenix. In March, 1983, pursuant to Volpi's invitation, Lee flew to New York and inspected various types of machinery sold by Volpi & Son. After Lee's visit, Volpi prepared and mailed a written contract, which Lee signed in Phoenix and returned to Volpi & Son in New York together with an $8,000 check payable to Volpi & Son and drawn on China Express's account at the Arizona Bank. Volpi & Son negotiated the check and collected its proceeds. The machine was never delivered.

The contract provides as follows: "Once [China Express] has installed the above equipment it will notify [Volpi & Son] and Mr. Peter Volpi will come to run and adjust the machines at [China Express's] plant." In addition, the contract provides for a one-year warranty of parts and service from the date of delivery in Phoenix; it also requires Volpi & Son to make any necessary repairs and replacements within 5 days of notice.

The referee issued a report recommending that China Express's motion for summary judgment be denied and the complaint dismissed. His recommendation was principally based upon a finding that, although Arizona was the site of negotiations, the parties failed to reach agreement there and, thus, the requirements of that jurisdiction's long-arm statute were not satisfied. Special Term confirmed the referee's report and dismissed the complaint. This appeal followed. We reverse.

Where a sister state's exercise of long-arm jurisdiction is challenged, the law of that state, even though it may be at odds with the New York rule, determines whether jurisdiction was properly obtained. (Augusta Lbr. & Supply v. Herbert H. Sabbeth Corp., 101 A.D.2d 846, 475 N.Y.S.2d 878; L & M House of Jeans v. Communication Control Systems, 88 A.D.2d 884, 452 N.Y.S.2d 602; app. dismd. 57 N.Y.2d 956.) In that regard, we should note, New York, unlike Arizona, has not chosen to extend its long-arm jurisdiction to the limits of constitutional tolerance. (See, Longines-Wittnauer Watch Co. v. Barnes & Reinecke, 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68; also, Masonite Corp. v. Hellenic Lines, Ltd., 412 F.Supp. 434, 438; Columbia Pictures Industries, Inc. v. Schneider, 435 F.Supp. 742, 749.)

16 A.R.S. Rules of Civil Procedure, Rule 4(e)(2), authorizes the Arizona courts to exercise personal jurisdiction over nonresident defendants who have "caused an event to occur in this state out of which the claim which is the subject matter of the complaint arose...." ² The Supreme Court of Arizona has held that this long-arm provision was "intended to give Arizona residents the maximum privileges permitted by the Constitution of the United States." (Phillips v. Anchor Hocking Glass Corp., 100 Ariz. 251, 254, 413 P.2d 732, 733; Maloof v. Raper Sales, Inc., 113 Ariz. 485, 557 P.2d 522; accord, Rhoads v. Harvey Publications, Inc., 124 Ariz. 406, 604 P.2d 670.) Thus, in applying this statute Arizona courts engage in a two-step analysis. They first determine whether the defendant has caused an event to occur in Arizona out of which the subject claim arose, and then decide whether the state's exercise of personal jurisdiction over the defendant is compatible with the requirements of the Fourteenth Amendment's due process clause. (See, e.g., Maloof v. Raper Sales, Inc., supra, 113 Ariz. at 487, 557 P.2d 522; Meyers v. Hamilton Corp., 143 Ariz. 249, 693 P.2d 904.) ³

In International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95, the Supreme Court articulated the standard by which exercises of personal jurisdiction are measured:

[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." (Id. at 316, 66 S.Ct. at 158, quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278.)

Recognizing that the unilateral activity of the party claiming a relationship with a nonresident defendant will not satisfy the minimum contacts requirement, the Supreme Court has held that there must be "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." (Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283.) This requirement "ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random', 'fortuitous' or 'attenuated' contacts, [citations omitted], or of the 'unilateral activity of another party or a third person,' [citation omitted]." (Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528.) "Jurisdiction is proper, however, where the contacts proximately result from actions by the defendant himself that create a 'substantial connection' with the forum State." (Id., quoting McGee v. International Life Insurance Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223.) Parties who "reach out beyond one state and create continuing relationships and obligations with citizens of another state" have effectively consented to the imposition of jurisdiction over them in the other state. (Travelers Health Assn. v. Virginia, 339 U.S. 643, 647, 70 S.Ct. 927, 929, 94 L.Ed. 1154.) Even a single contract can support in personam jurisdiction as long as it creates a "substantial connection" with the forum. (Burger King Corp. v. Rudzewitz, supra, 471 U.S. at 475, n. 18, 105 S.Ct. at 2184, n. 18; see, McGee v. International Life Insurance Co., supra, 355 U.S. at 223, 78 S.Ct. at 201.) In some instances, however, "single or occasional acts" related to the forum may be insufficient to establish jurisdiction if "their nature and quality and the circumstances of their commission" merely create an "attenuated" connection. (International Shoe Co. v. Washington, supra, 326 U.S. at 318, 66 S.Ct. at 159; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 299, 100 S.Ct. 559, 568, 62 L.Ed.2d 490.) A critical consideration in such cases is whether "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." (Id. at 297, 100 S.Ct. at 567.)

In Burger King Corp. v. Rudzewicz, supra, 471 U.S. 462, 105 S.Ct. 2174, its most recent pronouncement on the subject, the Supreme Court, in an action based on a breach of franchise obligations, held that a Florida court could assert long-arm jurisdiction over a Michigan resident who, although...