Cleopatra Kohlique, Inc. v. New High Glass, Inc.

• Citation: 652 F. Supp. 1254
• Decision Date: 29 January 1987
• Docket Number: No. 86 CV 412.,86 CV 412.
• Parties: CLEOPATRA KOHLIQUE, INC., Plaintiff, v. NEW HIGH GLASS, INC., Defendant. NEW HIGH GLASS, INC., Third-Party Plaintiff, v. FITAL DI RICHETTA PAOLA & C.S.A.S., Third-Party Defendant.
• Court: U.S. District Court — Eastern District of New York

652 F. Supp. 1254

CLEOPATRA KOHLIQUE, INC., Plaintiff, v. NEW HIGH GLASS, INC., Defendant.

NEW HIGH GLASS, INC., Third-Party Plaintiff, v. FITAL DI RICHETTA PAOLA & C.S.A.S., Third-Party Defendant.

No. 86 CV 412.

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

January 29, 1987.

Rosenberg & Tulis, New York City by Allan E. Mayefsky, for plaintiff.

Holtzmann, Wise & Shepard, New York City by Paula C. Dicks, for defendant and third-party plaintiff.

Gaetano D'Antona, Mamaroneck, for third-party defendant.

PLATT, District Judge.

This is a motion to dismiss the complaint and third-party complaint against Fital Di Richetta & C.S.A.S. pursuant to Fed.R. Civ.P. 12(b)(2) for lack of in personam jurisdiction. For the reasons set forth below, the motion is denied.

Background

Plaintiff Cleopatra Kohlique, Inc. ("Cleopatra") manufactures and distributes cosmetic products. According to plaintiff's amended complaint, in August 1984 Cleopatra ordered 1,000,000 mascara cases from defendant New High Glass, Inc. ("New High") for use in the manufacture and sale of Cleopatra's mascara product. Cleopatra intended to fill the mascara cases with liquid mascara. Plaintiff alleges that the mascara cases were defective in that they were designed to hold cream, not liquid, mascara.

Count I of the complaint asserts that New High breached its express and implied warranties of merchantability and fitness for a particular use. Count II seeks a declaratory judgment that Cleopatra is not obligated to pay New High for the defective mascara cases. Count III asserts that New High and third-party defendant Fital Di Richetta Paola & C.S.A.S. ("Fital"), the manufacturer of the cases, falsely and intentionally misrepresented to Cleopatra that the cases were designed to hold liquid mascara or that any defects would be rectified, thereby inducing additional orders of such cases. Cleopatra alleges in its opposition papers that as a result of this fraud it suffered the loss of New York based customers.

As to the third-party complaint, New High seeks indemnification from Fital for any liability New High may be found to have to Cleopatra as a result of the order of Fital's mascara cases. New High and Fital apparently contracted in Italy for the supply of the mascara cases to New High. The contract provided for the goods to be shipped F.O.B. Milan. However, it is undisputed that Fital knew the goods were being shipped to New York and, in fact, assisted with the shipment.

Fital moves to dismiss the direct complaint and the third-party complaint for lack of in personam jurisdiction asserting that neither Cleopatra nor New High has met its burden of showing that the Due Process Clause and the New York long arm statute have been satisfied.

Discussion

In this federal diversity action, Fital's amenability to suit is to be determined according to the law of New York State. Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir.1963). The plaintiff and the third-party plaintiff here must establish a prima facie showing that Fital is subject to such jurisdiction. Volkswagenwerk v. Beech Aircraft Corp., 751 F.2d 117 (2d Cir.1984).¹ The Court must separately analyze the basis for jurisdiction over Fital with respect to Cleopatra's fraud claim and New High's contract claim although these claims may arise from common acts by Fital. Jurisdiction over the fraud claim may not hang on the coattails of the contract claim. Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317, 324, 402 N.E.2d 122, 425 N.Y.S.2d 783 (1980); see also Interface Biomedical Laboratories Corp. v. Axiom Medical, Inc., 600 F.Supp. 731 (E.D.N.Y.1985).

Cleopatra and New High both seek to premise a finding in support of the exercise of jurisdiction on New York's long arm statute, section 302(a) of the New York Civil Practice Law and Rules ("N.Y.C.P.L. R."). As the reach of the long arm statute is in some respects narrower and in other respects broader than the constitutionally permissible outer limits of the Due Process Clause, it is necessary to determine whether the exercise of jurisdiction here will satisfy both. American Eutectic Welding Alloys Sales Co. v. Dytron Alloys Corp., 439 F.2d 428 (2d Cir.1971); Interface, 600 F.2d at 734.

The Fraud Claim

Cleopatra asserts as one basis for the exercise of jurisdiction as to its fraud claim N.Y.C.P.L.R. § 302(a)(3)(ii), which provides:

(a) Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary ... who ...

(3) commits a tortious act without the state causing injury to person or property within the state ... if he ...

(ii) expects or should reasonably expect the act to have New York consequences and derives substantial revenue from interstate or international commerce.

Plaintiff says that Fital's fraudulent representation constitutes a tortious act committed outside New York causing injury in New York by virtue of the loss of New York customers, that Fital should reasonably have expected New York consequences and that Fital derives substantial revenue from interstate or international commerce. Fital contends that any injury it may have caused occurred outside New York.

It is settled law in New York that where a defendant makes a misrepresentation outside of New York intending that it be relied upon within New York, the tort has been committed outside New York for jurisdictional purposes. Marine Midland Bank v. Keplinger & Associates, 488 F.Supp. 699 (S.D.N.Y.1980). Thus, Fital's alleged misrepresentation constitutes a tort committed outside New York.

Next, plaintiff must allege injury within New York. Although it is often difficult to determine the situs of a commercial injury, it is clear in the present case that plaintiff has sufficiently asserted a New York based injury. The Second Circuit has recognized that in locating the situs of a commercial injury the place where the plaintiff lost business is the most apt standard. American Eutectic, 439 F.2d at 433, quoting Spectacular Promotions, Inc. v. Radio Station WING, 272 F.Supp. 734, 737 (E.D. N.Y.1967); Morse Typewriter Co. v. Samanda Office Communication, Ltd., 629 F.Supp. 1150 (S.D.N.Y.1986); Sybron Corp. v. Wetzel, 46 N.Y.2d 197, 385 N.E.2d 1055, 413 N.Y.S.2d 127 (1978). Here plaintiff alleges, and submits evidence in support thereof, that it has lost at least some New York business as a result of the alleged fraud. Plaintiff's Exhibit A to Mintz Affidavit in Opposition to Motion to Dismiss. Plaintiff does not simply assert that its New York injury derives from the fact of its domicile here. See Sybron v. Wetzel, supra; Hargrave v. Oki Nursery, Inc., 636 F.2d 897 (2d Cir.1980); Trafalgar Capital Corp. v. Oil Producers Equipment Corp., 555 F.Supp. 305 (S.D.N.Y.1983). Even if plaintiff was domiciled in another State, the loss of New York customers would constitute a New York injury. Interface, 600 F.Supp. at 740. Therefore, we find that the element of an injury in New York is satisfied.

Once we determine that plaintiff has sufficiently alleged the commission of a tort outside New York causing injury within New York we must determine whether defendant should reasonably have expected New York consequences. American Eutectic, 439 F.2d at 434. We find that both the Due Process Clause and the statutory requirement that defendant should reasonably expect New York consequences are satisfied. If the evidence at trial in fact shows that Fital fraudulently induced Cleopatra to purchase additional mascara cases, Fital should have reasonably expected Cleopatra to be injured in New York, where Fital was shipping the goods. Fital's intentional shipment of the goods into New York State negates a finding that injury in New York was simply fortuitous. It is not necessary that defendant foresee the specific event producing injury in New York; it is sufficient that the defendant foresee the possibility of forum consequences generally. See Fantis Foods, Inc. v. Standard Importing Co., 49 N.Y.2d 317, 425 N.Y.S.2d 783, 402 N.E.2d 122 (1980). Had the goods in question caused physical injury in New York Fital would have no claim that such injury was unforeseeable. Despite the commercial nature of the injury in question we find that under the facts alleged both the statutory requirement of foreseeability and the due process requirement of purposeful activity giving rise to a reasonable anticipation of being haled into a New York court are satisfied. See Vecchio v. S & T Manufacturing Co., 601 F.Supp. 55 (E.D.N.Y.1984).

As Fital does not dispute that the other requirements of § 302(a)(3)(ii) are satisfied we need not determine these issues. Accordingly, the motion to dismiss Cleopatra's fraud claim is denied.

The Contract Claim

New High premises a finding of in personam jurisdiction as to its third-party claim for indemnity on N.Y.C.P.L.R. § 302(a)(1), which provides in part:

(a) Acts which are the basis of jurisdiction. As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary ... who ...

(1) ... contracts anywhere to supply goods ... in the state.

New High has established that New High and Fital entered a contract outside New York for the supply of mascara cases and that the claim here arises out of that contract. Despite Fital's attempt to persuade us otherwise, it is apparent from Fital's own admissions that Fital knowingly and intentionally shipped the goods, or a portion thereof, to New York. Therefore, the requirements of § 302(a)(1) are satisfied. See West Mountain Corp. v. Seasons of Leisure International, Inc., 82 A.D.2d 931, 440 N.Y.S.2d 729 (App. Div.1981).

Defendant's reliance on Tonn's v. Spiegel's, 90 A.D.2d 548, 455 N.Y.S.2d 125 (2d 1982), for the proposition that where the manufacturer has no control as to the ultimate destination of the goods it may...