Datasouth Computer v. THREE DIMENSIONAL TECH.

• Decision Date: 07 August 1989
• Docket Number: No. C-C-89-209-P.,C-C-89-209-P.
• Citation: 719 F. Supp. 446
• Court: U.S. District Court — Western District of North Carolina
• Parties: DATASOUTH COMPUTER CORP., Plaintiff, v. THREE DIMENSIONAL TECHNOLOGIES, INC., Defendant.

719 F. Supp. 446

DATASOUTH COMPUTER CORP., Plaintiff, v. THREE DIMENSIONAL TECHNOLOGIES, INC., Defendant.

No. C-C-89-209-P.

United States District Court, W.D. North Carolina, Charlotte Division.

August 7, 1989.

David B. Hamilton, Richard E. Fay, Petree Stockton & Robinson, Charlotte, N.C., for plaintiff.

Joel S. Rubin, Roger S. Davis, Davis & Rubin, Boston, Mass., for defendant.

ORDER

ROBERT D. POTTER, Chief Judge.

I. PRELIMINARY STATEMENT

THIS MATTER is before the Court on (1) Defendant's Motion to Stay Proceedings, filed June 30, 1989, (2) Defendant's Motion to Dismiss for Lack of Jurisdiction, filed June 30, 1989, (3) Defendant's Alternative Motion to Transfer Venue, filed June 30, 1989, and (4) Defendant's Motion for Protective Order Regarding Discovery and Request for Stay, filed July 13, 1989.

The parties have filed briefs and affidavits in support of, and in opposition to, Defendant's motions. Neither party has requested to be allowed to offer oral testimony.

The parties have adequately briefed the issues, and, therefore, this Court will dispose of Defendant's motions without a hearing because oral argument would not significantly aid this Court's decision-making process.¹

For the reasons that follow this Court will (1) grant Defendant's Motion to Stay Proceedings, (2) deny, as moot, Defendant's Motion to Dismiss for Lack of Jurisdiction, (3) grant Defendant's Alternative Motion to Transfer Venue, (4) deny, without prejudice, Defendant's Motion for Protective Order Regarding Discovery and Request for Stay, and (5) direct the Clerk to transfer the file of this case to the District of Massachusetts.

II. BACKGROUND²

This is, essentially, a contract action. Plaintiff, Datasouth Computer Corporation ("Datasouth"), is a North Carolina corporation that has its principal place of business in Charlotte, North Carolina. (Waller Aff. at 17). Datasouth is engaged in the business of designing, manufacturing, marketing, and selling high performance dot matrix printers, which are used with computers to produce graphics and text. (Id.). For the past several years, Datasouth has had its employees working on the "Fred Printer Project," the purpose of which is to incorporate into Datasouth's product line a state-of-the-art, durable, high-quality, high performance line of printers, to be known as the Performax Line. (Id.)

Defendant, Three Dimensional Technologies, Inc. ("3D"), is a Massachusetts corporation that has its principal place of business in Hanover, Massachusetts. (Aronson June 27, 1989 Aff. at 1). 3D is engaged in the business of designing and producing plastic components for its customers. (Id. at 2). In the course of its business, 3D designs and produces (1) the tooling necessary to produce such plastic components and (2) models — or prototypes — of the components. (Id.). 3D also provides support services to its customers. (Id.). 3D does not maintain an office in North Carolina, and it does not have any employees, salesmen, or agents in North Carolina. (Id. at 3). 3D does not regularly solicit business in North Carolina nor does it provide goods or services there or receive substantial revenues from businesses in North Carolina on a systematic and continuous basis. (Id.).

During the latter part of 1986, 3D's employee, Peter Harrison ("Harrison"), made two trips to Datasouth's offices in Charlotte for the purpose of soliciting business on behalf of 3D. (Waller Aff. at 2). Harrison's first trip was a sales call to determine if Datasouth would be interested in using 3D's services, and his second trip was to give a full-scale presentation of 3D's services and to discuss the possibility of Datasouth engaging 3D to work on the Fred Printer Project. (Id.). 3D's role in the Fred Printer Project would be to design and manufacture the plastic cover, or shell, that would contain the mechanical and electrical components of the printer. (Id.). Specifically, 3D would design the cover and would design and manufacture the tools, or injection-molds, from which the cover would be fabricated. (Id.). 3D's work on the Fred Printer Project would have several phases, including (1) the concept phase, (2) the design support phase, (3) the engineering support phase, and (4) the manufacturing support phase. (Id. at 2-3).

The printer cover was an integral part of the high performance dot matrix printer Datasouth was developing, and, therefore, large amounts of technical information would need to be exchanged between Datasouth and 3D. (Id. at 3).

In the spring of 1987, 3D began to work on the printer cover for the Fred Printer Project, and the parties exchanged a large amount of technical, and other, information by various means. (Id.). During this period, on at least four occasions 3D's representatives, including its President, Steven R. Aronson ("Aronson"), met with Datasouth's representatives at Datasouth's offices in Charlotte to work on the development of the printer cover. (Id. at 3-4).

In the spring of 1988, Datasouth and 3D determined that the design concept 3D was developing was unacceptable and unworkable, and the parties agreed to cancel 3D's involvement in the Fred Printer Project. (Id. at 4).

In April, May, and June of 1988, Datasouth and 3D began discussions regarding a new concept for the printer cover, and they conducted negotiations relating to a contract between Datasouth and 3D. These negotiations took place at Datasouth's offices in Charlotte on at least four occasions. (Id.).

On July 1, 1988, Datasouth and 3D entered into a contract concerning 3D's work on the Fred Printer Project (the "Contract"). (Complaint, Exh. A; Aronson June 27, 1989 Aff. at 2; Waller Aff. at 4). The Contract provides that 3D will perform various services for Datasouth, including the following:

(1) preparation of prints, plans, sketches, and renderings;

(2) computer-aided design of the plastic components covered by the Contract;

(3) the making of models and mock-ups; and

(4) the making of Low Pressure Injection Molding ("LPIM") molds and parts.

(Aronson June 27, 1989 Aff. at 2).

The Contract also provides that it is to be governed by the law of Massachusetts.

By the terms of the Contract, Datasouth transmitted to 3D various instructions, specifications, changes in specifications, and documents. (Id.). 3D sent to Datasouth numerous concept sheets, plots, sketches, computer data bases, and other documentation. (Waller Aff. at 4).

Between September 9, 1988 and May 13, 1989, 3D's representatives met with Datasouth's representatives in Charlotte on at least five occasions to work on the project. (Id. at 4). 3D also delivered to DataSouth in Charlotte various items, including models, molds, and low-pressure injection molds ("LPIM"); all totalled, 3D shipped seventeen (17) LPIM sets and other parts to Datasouth in Charlotte. (Id. at 5, Exh. B).

Under the terms of the Contract, Datasouth has paid 3D the sum of $689,725.00, which includes an advance payment made on tools 3D was to have delivered to Datasouth during the manufacturing support phase; 3D allegedly never delivered the tools and never commenced performance under the manufacturing support phase. (Id. at 6).

3D represents that the work performed for Datasouth caused 3D to incur substantial financial losses. (Def't's Memo. In Support of Alternative Motion to Transfer Venue, Exh. B (showing cash position of $1,692.00 and a stockholder deficit of $1,379,929.00); Aronson July 25, 1989 Aff. at 4-6 (3D's financial "situation has worsened")).³

On May 12, 1989, Datasouth commenced this action against 3D. Datasouth alleges in its Complaint that 3D and Datasouth had "discussions and negotiations concerning the ability of 3D to provide a `vertical' line of services and materials for Datasouth which would culminate in the production of tools, or steel molds, from which the enclosure, or cover of the Datasouth's Performax line of printers could be manufactured." (Complaint at 2). Datasouth further alleges that it relied upon 3D's representations and entered into a contract with 3D for the provision of goods and services. Finally, Datasouth alleges that 3D (1) anticipatorily breached the Contract (Complaint, Count I), (2) breached the Contract (Count II), and (3) negligently failed to perform the work required under the Contract (Count III).

On June 30, 1989, 3D filed its Motion to Dismiss, in lieu of an answer.

This Court's subject-matter jurisdiction over the present case is based upon the complete diversity of citizenship of the parties and the amount in controversy, which exceeds ten thousand dollars ($10,000.00). 28 U.S.C.A. § 1332(a)(1) (West Supp.1989) (suits involving citizens of different states).⁴ Venue is proper in the Western District of North Carolina because Plaintiff has its principal office and place of business in this District. 28 U.S.C.A. § 1391(a) (West 1976).

III. DISCUSSION

A. Venue

Defendant is seeking transfer of the present action to the District of Massachusetts, pursuant to Section 1404(a) of Title 28, United States Code. Defendant is also seeking to dismiss the present action, pursuant Rule 12(b)(2) of the Federal Rules of Civil Procedure, asserting that this Court lacks personal jurisdiction over it. This Court will consider and grant the motion to transfer without resolving the jurisdictional issue. See Kahhan v. City of Fort Lauderdale, 566 F.Supp. 736, 738 (E.D.Pa. 1983). Although this Court may not have personal jurisdiction over 3D,⁵ it still has the power to transfer the action to another district pursuant to Section 1404(a). Id.; Internatio-Rotterdam, Inc. v. Thomsen, 218 F.2d 514, 516-517 (4th Cir.1955); Ulman v. Boulevard Enters., Inc., 638 F.Supp. 813, 815 & n. 7 (D.Md.1986) ("Where personal jurisdiction is lacking but venue is present, the original forum court has the authority to transfer pursuant to and in accordance with 28 U.S.C. § 1404(a), provided, of course, that subject matter jurisdiction exists in the original forum court....