Cranston Print Works Co. v. Brockmann Intern. AG, 81 Civ. 1350 (WCC).
| Decision Date | 10 July 1981 |
| Docket Number | No. 81 Civ. 1350 (WCC).,81 Civ. 1350 (WCC). |
| Citation | 521 F. Supp. 609 |
| Parties | CRANSTON PRINT WORKS COMPANY, Plaintiff, v. BROCKMANN INTERNATIONAL A. G., Brockmann Incorporated, Juergen H. Brockmann, Uwe H. Flato, and Wendy J. Rhodes, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Otterbourgh, Steindler, Houston & Rosen, P. C., New York City, for plaintiff; Kurt J. Wolff, New York City, of counsel.
Marshall, Bratter, Greene, Allison & Tucker, New York City, for defendants, Brockmann Intern. A. G., Brockmann Inc., Juergen H. Brockmann and Uwe H. Flato; Richard L. Bond, Robert J. Kipnees, Susan L. Lesinski, Maura J. Wogan, New York City, of counsel.
This is an action alleging breach of contract and conspiracy to defraud. Defendants Brockmann International A.G. ("BIAG"), Brockmann Incorporated ("Brockmann Inc."), Juergen H. Brockmann ("Brockmann") and Uwe H. Flato ("Flato") have moved to dismiss the amended complaint for lack of jurisdiction over the person, Rule 12(b)(2), F.R.Civ.P., for insufficiency of service of process, Rule 12(b)(5), F.R.Civ.P., and, as to the sixth claim in the amended complaint, for failure to state a claim upon which relief can be granted, Rule 12(b)(6), F.R.Civ.P.
According to the amended complaint, plaintiff Cranston Print Works Company ("Cranston") is a Rhode Island corporation qualified to do business in New York, and in fact doing business in New York through two New York divisions, VIP Division ("VIP") and Cranston Print Works U.S.A. Division ("Cranston-USA").
BIAG is a Liechtenstein corporation with its principal place of business in that country and an office in North Carolina. Brockmann Inc. is a North Carolina corporation with its principal place of business in that state. Brockmann is a non-citizen of the United States and is the president and principal shareholder of both BIAG and Brockmann Inc. Flato and Rhodes are alleged to be North Carolina citizens employed by both BIAG and Brockmann Inc.1
The amended complaint alleges that, in October 1980 in New York City, Cranston, through VIP, entered into a contract with BIAG whereby BIAG agreed to purchase from Cranston 57,282¼ yards of fabric. Pursuant to the contract, BIAG opened an irrevocable letter of credit at a North Carolina bank in favor of Cranston-USA. Payments under the letter of credit were to be made sixty days after shipment. A subsequent contract between Cranston and BIAG in November 1980, regarding 23,238 yards of fabric, contained the same terms as the October agreement, and BIAG opened a second irrevocable letter of credit at the North Carolina bank in favor of Cranston-USA pursuant thereto.
Counts One through Five of the amended complaint, apparently directed at BIAG,2 recite the completion of five partial shipments of fabric from Cranston to BIAG pursuant to the October and November 1980 agreement and BIAG's instructions to the North Carolina bank not to pay under the letters of credit despite the passage of sixty days following each of the shipments, and seek damages for breach of the October and November 1980 contracts in the amounts due for the five shipments.
Count Six of the amended complaint, which did not appear in the original complaint, alleges a conspiracy on the part of defendants to defraud Cranston. Although the two contracts prohibited or limited partial shipments, defendants are alleged to have made certain representations to Cranston in New York, which induced Cranston to agree to deliver partial shipments to BIAG. BIAG agreed to instruct the North Carolina bank to amend the letters of credit to allow for payment to Cranston for partial shipments. Cranston seeks damages under Count Six in the amount of $251,587.97, the total amount claimed to be due in Counts One through Five for completed partial shipments.
BIAG has moved to dismiss the contract claims — Counts One through Five of the amended complaint — on the ground that personal jurisdiction over it is lacking. BIAG points out that none of the defendants is a New York citizen or resident; that none of them is registered to do, or does, business in New York; and that none of them maintains any office, warehouse, bank account, telephone listing, mailing address, employees, agents or sales representatives in New York. Thus, BIAG persuasively argues, the only conceivable basis for personal jurisdiction over it on the contract claims is N.Y.C.P.L.R. § 302(a)(1), which provides for personal jurisdiction over non-domiciliaries who "transact any business within the state ...."
In order for Cranston to assert personal jurisdiction over BIAG pursuant to Section 302(a)(1), BIAG must not only have transacted business in New York, but the cause of action must arise out of the business transacted in New York. E.g., Chertok v. Ethyl Corp. of Canada, 341 F.Supp. 1251, 1254 (S.D.N.Y.1972). In this regard BIAG points out that the contracts called for no business to be transacted by it in New York. The fabric was apparently to be shipped from Cranston's mill in Massachusetts to Europe. Payment was to be made by letters of credit issued by and presented to the North Carolina bank.
Accordingly, personal jurisdiction hinges upon Cranston's allegation in the amended complaint that Cranston and BIAG entered into the first of the two contracts in New York City on October 17, 1980.3 BIAG, by Brockmann, denies that the October 17 contract was entered into in New York. According to Brockmann, the October 17 contract consisted of a Telex message sent by Brockmann from North Carolina to New York, confirming two orders placed over the telephone that day from North Carolina to New York.
In response, Cranston has sought to detail the history of the two contracts by the affidavits of several of its employees, which in sum set forth the following chronology of events in 1980 and 1981:
(1) the October 8 meeting in New York was purely exploratory;
(2) the delivery date, a key item in the substantive dispute between the parties, was set on October 17 and any different projection discussed on October 8 is irrelevant;
(3) the October 29 and December 4 meetings in New York were held for the sole purposes of (a) allowing Brockmann to look at additional fabrics, which were never purchased, and (b) discussing Cranston's inability to meet the shipping deadline; (4) BIAG did not seek expedited shipments, but rather Cranston required extensions of time; and
(5) Brockmann never agreed to modify shipping terms in the letters of credit.
Under Section 302(a)(1), inquiry into the sufficiency of contacts with the forum state turns upon the totality of the defendant's acts within the forum state in relation to the...
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