O'CONNOR v. Lee-Hy Paving Corp., 75 C 1853.

• Citation: 437 F. Supp. 994
• Decision Date: 27 September 1977
• Docket Number: No. 75 C 1853.,75 C 1853.
• Parties: Marguerite T. O'CONNOR, as Administratrix of the Goods, Chattels and Credits of Daniel J. O'Connor, Deceased, Plaintiff, v. LEE-HY PAVING CORP. and Davis E. Clem, Defendants.
• Court: U.S. District Court — Eastern District of New York

437 F. Supp. 994

Marguerite T. O'CONNOR, as Administratrix of the Goods, Chattels and Credits of Daniel J. O'Connor, Deceased, Plaintiff, v. LEE-HY PAVING CORP. and Davis E. Clem, Defendants.

No. 75 C 1853.

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

September 27, 1977.

Cyrus Diamond, New York City (Fuchsberg & Fuchsberg, New York City, of counsel), for plaintiff.

Thomas M. Bistline, New York City (Simpson, Thacher & Bartlett and Roy L. Reardon, New York City, of counsel), for defendants.

MEMORANDUM and ORDER

DOOLING, District Judge.

Defendants, by motion to set aside the order of attachment and service of process and to dismiss the action, raise the question whether Shaffer v. Heitner, 1977, ___ U.S. ___, 97 S.Ct. 2569, 53 L.Ed.2d 683, invalidates jurisdiction based on the typical Seider v. Roth, 1966, 17 N.Y.2d 111, 269 N.Y. S.2d 99, 216 N.E.2d 312, attachment.

The action is for personal injuries and wrongful death. The claim is that plaintiff's decedent was killed through the negligent operation of a grader owned by Lee-Hy and driven by Clem at a shopping center construction site in Henrico County, Virginia. The decedent was, and the plaintiff widow and her three children are residents of New York. Lee-Hy is a Virginia corporation the activities of which are confined to that state and Clem is a resident of Virginia, an employee of Lee-Hy and has been working only in Virginia. The decedent was an employee of a New York corporation and his office was at the firm's New York office; he visited the shopping center construction site frequently, at least once a week, and, frequently, three or four times in a single week. He was on an overnight visit to the site on September 24, 1975, when he was killed.

Plaintiff obtained a Seider v. Roth attachment based on the contractual obligations of Royal Globe Insurance Company and Continental Casualty Insurance Company to defendant Lee-Hy. Both insurance companies maintain offices in New York.

Defendants argue that Shaffer requires for the exercise of jurisdiction sufficient contacts among the forum, the defendant and the litigation to satisfy the standards of International Shoe Co. v. Washington, 1945, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95.^* Applying that test, they argue that defendants had no relevant contact whatever with the forum state, New York. The necessary conclusion, they urge, is that it is only the suability of the insurers, treated as "property" of defendants, that can be put forward as the basis of jurisdiction, and that, under Shaffer is insufficient.

Plaintiff contends, in substance, that this is not a case in which jurisdiction builds on nothing but property unconnected with the subject matter of the action, but an application of a now familiar jurisdictional principle that was evolved in keeping with the standards outlined in International Shoe. Plaintiff notes that she is a New York resident and that the insurance contracts are contracts to defend against and indemnify against her claim.

Defendants reply that it is defendants' not plaintiffs', contacts with New York that are jurisdictionally significant, and that the property here, the insurance contracts, are "property" in which plaintiff has an interest only if and to the extent — and perhaps, even, when — her claim is shown to be valid, and is, thus, no different from any other property seized under a writ of foreign attachment.

Shaffer is best read for the legal concepts it enunciates rather than for its application of them to the facts in the record before it. The dissent of Mr. Justice Brennan from Part IV of the opinion, and that part only, suggests that, and the dissent reflects also disagreement with the limited or nil significance assigned to the choice-of-law factor in determining the question of jurisdiction (___ U.S. at ___, ___, 97 S.Ct. at 2586, 2591). Shaffer clearly and repeatedly emphasizes that jurisdiction depends on a finding of sufficient contacts among defendants, the litigation, and the forum (state) (___ U.S. at ___, ___, ___, ___, ___ - ___, 97 S.Ct. at 2572, 2576, 2580, 2582, 2582-2583, and, in concurring and dissenting opinion, ___, 97 S.Ct. at 2588), and holds that, while the presence of property in the forum state may bear on the existence of jurisdiction by providing contacts among the forum state, the defendant, and the litigation (___ U.S. at ___, 97 S.Ct. at 2582), where the property assertedly serving as the basis for jurisdiction is completely unrelated to plaintiff's cause of action, the presence of the property alone would not support a State's judicial jurisdiction (___ U.S. at ___ - ___, 97 S.Ct. at 2582-2583), and all assertions of state judicial jurisdiction must be evaluated by the standards set out in International Shoe and later cases (___ U.S. at ___ - ___, 97 S.Ct. at 2584-2585). The Court rejected as without modern justification the "fiction" that jurisdiction over property is anything but an assertion of jurisdiction over the owner of the property. The standard drawn from International Shoe (___ U.S. at ___ - ___, 97 S.Ct. at 2579-2580) is this:

"The question in International Shoe was whether the corporation was subject to the judicial and taxing jurisdiction of Washington. Chief Justice Stone's opinion for the Court began its analysis of that question by noting that the historical basis of in personam jurisdiction was a court's power over the defendant's person. That power, however, was no longer the central concern:

`But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due 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." Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278.' 326 U.S., at 316, 66 S.Ct., at 158.

"Thus, the inquiry into the State's jurisdiction over a foreign corporation appropriately focused not on whether the corporation was `present' but on whether there have been

`such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there.' Id., at 317, 66 S.Ct., at 158.

Mechanical or quantitative evaluations of the defendant's activities in the forum could not resolve the question of reasonableness:

`Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.' Id., at 319, 66 S.Ct., at 160.

Thus, the relationship among the defendant, the forum, and the litigation, rather than the mutually exclusive sovereignty of the States on which the rules of Pennoyer rest, became the central concern of the inquiry into personal jurisdiction. The immediate effect of this departure from Pennoyer's conceptual apparatus was to increase the ability of the state courts to obtain personal jurisdiction over nonresident defendants." (Footnotes omitted.)

Noting that in cases like Harris v. Balk, 1905, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023, "the only role played by the property is to provide the basis for bringing the defendant into court," the Court said (___ U.S. at ___, 97 S.Ct. at 2583):

"In such cases, if a direct assertion of personal jurisdiction over the defendant would violate the Constitution, it would seem that an indirect assertion of that jurisdiction should be equally impermissible."

It is not argued, nor could it be, that Lee-Hy or Clem have even a minimum of contacts with New York, the forum state, or that, if, instead of contract rights against two insurers, tangible property transiently in New York were the property attached, it would be easy to claim that jurisdiction could exist in a New York court. That is not clear to the exclusion of every doubt. If Pennoyer v. Neff, 1877, 95 U.S. 714, 722, 723, 727, 24 L.Ed. 565, was wrong so far as it sought to resolve questions of jurisdiction in terms of two principles, that is, that each state has exclusive jurisdiction and sovereignty over persons and property within its territory and that no state can exercise direct jurisdiction and authority over persons or property outside its territory, and was wrong to conclude that due process with respect to the judicial disposition of property required no more than seizure of it at the very outset of the judicial proceeding and the giving of adequate notice and the opportunity to defend against the claim on which the property was seized, the new standard cannot be taken as crystallized into a declaration that every suit initiated against a non-resident by writ of foreign attachment must be dismissed. The conclusion is, rather, that it must be examined anew to determine whether the demands of fundamental fairness have been met or flouted, using the International Shoe and Shaffer standards. In that analysis, the kind of jurisdiction professedly exercised is significant. It, then, becomes necessary to note that in Shaffer and in International Shoe the jurisdiction sought to be exercised was personal jurisdiction, the power to award a judgment against the defendant personally in any amount warranted by the evidence. In a wider analysis it is to be borne in mind that when allegedly tortious conduct causes death, a legal relationship is established between the alleged tort feasor and the decedent's dependents. Despite Hanson v. Denckla, 1957, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283, an analysis of jurisdictional propriety in...