Craig v. General Finance Corp. of Illinois

Citation504 F. Supp. 1033
Decision Date12 January 1981
Docket NumberCiv. A. No. M-80-1753.
PartiesBarry CRAIG v. GENERAL FINANCE CORPORATION OF ILLINOIS
CourtU.S. District Court — District of Maryland

Michael P. Darrow, Annapolis, Md., for plaintiff.

Robert L. Flanagan, and Joshua R. Treem, Baltimore, Md., for defendant.

MEMORANDUM AND ORDER

JAMES R. MILLER, Jr., District Judge.

Plaintiff filed this diversity action to recover damages allegedly resulting from defendant's communication with plaintiff's employer as to his unsatisfied indebtedness. Plaintiff's claim is founded upon Md. Commercial Law Code Ann. § 14-202(4). That section provides a cause of action in tort against a debt collector who "contact(s) a person's employer with respect to a delinquent indebtedness before obtaining a final judgment against the debtor." See Cilento v. B. T. Credit Co., Inc., 424 F.Supp. 1 (D.Md.1977). Damages that are proximately caused by a violation of section 14-202(4) may be recovered pursuant to Md. Commercial Law Code Ann. § 14-203, including damages for emotional distress.

This case is before the court on defendant's motion to dismiss for lack of personal jurisdiction. Rule 12(b)(2), F.R.Civ.P. Since defendant has contested jurisdiction, the burden of proving sufficient jurisdictional facts rests with plaintiff. See McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 182, 189, 56 S.Ct. 780, 782, 785, 80 L.Ed. 1135 (1936); Malinow v. Eberly, 322 F.Supp. 594, 600 (D.Md.1971).

I. Factual Overview

Defendant is a Delaware corporation with its principal place of business in Waukegan, Illinois. Plaintiff is employed by the United States Naval Academy Band, and presently resides in Anne Arundel County, Maryland. In November of 1978, plaintiff, while residing in Illinois, filed a bankruptcy petition in the United States District Court for the Northern District of Illinois. Defendant was a general, unsecured creditor of plaintiff at the time the petition was filed.

In support of its dismissal motion, defendant has submitted the affidavit of George Lucas, defendant's general manager and the person responsible for plaintiff's credit account (Paper No. 4, attachment). According to the Lucas affidavit, plaintiff visited defendant's Illinois office in December of 1978, seeking a new loan. During that visit plaintiff executed a note in the amount of $2,400, which included the amount of the new loan, his prior indebtedness, and finance charges. The Lucas affidavit also states the following: (1) defendant has never made any loans in Maryland; (2) defendant does not have and never has had a place of business or employees in Maryland; (3) all loans were made to plaintiff in Illinois and all loan negotiations occurred in Illinois; (4) in January of 1979, plaintiff advised defendant that he was moving to Maryland, and that after plaintiff moved to Maryland defendant's only dealings with plaintiff involved letters and telephone calls originating in Illinois; and (5) defendant's Maryland communications were for the purpose of obtaining payment of loans made in Illinois, and not to solicit new business.

In response to defendant's motion, plaintiff submitted the affidavit of Samuel J. Brown, an attorney he had retained to handle his debt problems (Paper No. 12), as well as his own affidavit (Paper No. 13). Plaintiff's affidavit alleges that he moved from Illinois to Maryland on January 15, 1979, and that in February of 1979, he began receiving telephone calls from defendant at his place of employment. Plaintiff further states that defendant called and sent letters to his employer concerning his indebtedness to defendant.

Attached to plaintiff's affidavit are copies of three undated letters, which defendant allegedly sent to plaintiff's commanding officer, and a copy of a letter dated December 7, 1979, addressed to a Baltimore credit bureau. Attached to the complaint is a copy of a letter dated February 12, 1980, from plaintiff's employer to defendant. Among other things, this letter informed defendant that it was a violation of Maryland law to contact a person's employer about a debt that had not been reduced to judgment.

Finally, plaintiff alleges that he had no contact with defendant in Illinois subsequent to his filing for bankruptcy in November of 1978. This allegation, coupled with a similar statement in Brown's affidavit, is apparently designed to support the inference that the debt reaffirmation was executed in Maryland.1 Brown's affidavit also states that he received several telephone calls from defendant, that he informed defendant that he was an attorney handling debt matters for plaintiff, and that although defendant knew of his legal representation, defendant nevertheless contacted plaintiff's employer.

II. Long Arm Jurisdiction

The Maryland long arm statute defines the circumstances under which Maryland courts may exercise personal jurisdiction over non-residents. It provides as follows:

"(a) Condition — If jurisdiction over a person is based solely upon this section, he may be sued only on a cause of action arising from any act enumerated in this section.
(b) In general — A court may exercise personal jurisdiction over a person, who directly or by an agent:
(1) Transacts any business or performs any character of work or service in the State;
(2) Contracts to supply goods, food, services, or manufactured products in the State;
(3) Causes tortious injury in the State by an act or omission in the State;
(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State;
(5) Has an interest in, uses, or possesses real property in the State; or (6) Contracts to insure or act as surety for, or on, any person, property, risk, contract, obligation, or agreement located, executed, or to be performed within the State at the time the contract is made, unless the parties otherwise provide in writing."

Md. Courts & Judicial Proceedings Code Ann. § 6-103.

For the statute to apply it is sufficient if any of the provisions of subsection (b) are satisfied. United Merchants & Mfrs., Inc. v. David & Dash, Inc., 439 F.Supp. 1078, 1082 (D.Md.1977); Lawson v. Baltimore Paint & Chemical Corp., 298 F.Supp. 373, 377 (D.Md.1969). Application of the long arm statute is essentially a two-step process. The court must first determine whether a particular subsection purports to authorize service of process on the non-resident. Second, the court must determine whether that service and the attendant exercise of personal jurisdiction comports with due process. See Haynes v. James H. Carr, Inc., 427 F.2d 700, 703 (4th Cir.), cert. denied, 400 U.S. 942, 91 S.Ct. 238, 27 L.Ed.2d 245 (1970); Geelhoed v. Jensen, 277 Md. 220, 224, 352 A.2d 818 (1976).

This court is bound by the decisions of the Court of Appeals of Maryland as to whether a particular subsection will reach certain conduct. McLaughlin v. Copeland, 435 F.Supp. 513, 522 (D.Md.1977); Bennett v. Computers Intercontinental, Inc., 372 F.Supp. 1082, 1084 (D.Md.1974). See Shealy v. Challenger Mfg. Co., 304 F.2d 102, 104 (4th Cir. 1962). Federal law is controlling, however, as to whether the exercise of personal jurisdiction violates due process. United Merchants & Mfrs., Inc. v. David & Dash, Inc., 439 F.Supp. at 1801. The exercise of personal jurisdiction by this court over defendant, therefore, is subject ultimately to the constitutional limitations set forth by the Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny.2

A. Subsection (b)(3)

Maryland's long arm statute was modeled after the Uniform Interstate and International Procedures Act, 13 U.L.A. 285 (1975 Master Edition). Carter v. Massey, 436 F.Supp. 29, 32 (D.Md.1977); Malinow v. Eberly, 322 F.Supp. at 598. Not all subsections of the Maryland statute, however, are coterminous with due process. As Judge Sobeloff explained in Beaty v. M. S. Steel Co., 401 F.2d 157 (4th Cir. 1968), cert. denied, 393 U.S. 1049, 89 S.Ct. 686, 21 L.Ed.2d 691 (1969), those parts of Maryland's long arm statute that have been codified as subsections (b)(3) and (b)(4) were intended by the legislature to be more restrictive than the broad single act, tortious injury type of statute construed in Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961). This was accomplished by separating the elements of "act" and "injury", and requiring either (1) that both the act and the injury occur in Maryland, or (2) that if only the injury occurred in Maryland, the non-resident have some other significant contacts with Maryland. Beaty v. M. S. Steel Co., 401 F.2d at 159-60. See Piracci v. New York City Employees' Retirement System, 321 F.Supp. 1067, 1070 (D.Md.1971); Geelhoed v. Jensen, 277 Md. at 223-24 n.3, 352 A.2d 818. See also Krashes v. White, 275 Md. 549, 559, 341 A.2d 798 (1975).

Plaintiff contends that personal jurisdiction over defendant may be exercised pursuant to subsection (b)(3). For that subsection to apply there must be (1) a tortious injury in Maryland that was (2) caused by an act or omission in Maryland. McLaughlin v. Copeland, 435 F.Supp. at 525. That the tortious injury, if any, occurred in Maryland is not disputed. The parties differ, however, as to whether defendant committed an act in Maryland within the meaning of subsection (b)(3).

Defendant maintains that under Zinz v. Evans & Mitchell Industries, 22 Md.App. 126, 324 A.2d 140 cert. denied, 272 Md. 751 (1974), the mailing of letters and the making of telephone calls from Illinois does not constitute an act in Maryland under subsection (b)(3). The issue in Zinz, a defamation action, was whether the defendant's mailing of a letter from Georgia to a...

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