Dazey Corp. v. Wolfman, Civil Action No. 96-2103-GTV.

• Citation: 948 F.Supp. 969
• Decision Date: 19 November 1996
• Docket Number: Civil Action No. 96-2103-GTV.
• Parties: DAZEY CORPORATION, Plaintiff, v. Jeffrey WOLFMAN, Defendant.
• Court: U.S. District Court — District of Kansas

948 F.Supp. 969

DAZEY CORPORATION, Plaintiff, v. Jeffrey WOLFMAN, Defendant.

Civil Action No. 96-2103-GTV.

United States District Court, D. Kansas.

November 19, 1996.

Margaret Gallagher Hague, Paul D. Sinclair, Sinclair, Sawyer, Thompson, Haynes & Cowing, P.C., Kansas City, MO, for Dazey Corporation.

Gordon E. Wells, Jr., Lathrop & Gage L.C., Overland Park, KS, for Jeffrey Wolfman.

MEMORANDUM AND ORDER

VAN BEBBER, Chief Judge.

This diversity case is before the court upon defendant Jeffrey Wolfman's motion to dismiss for lack of personal jurisdiction (Doc. 21). For the reasons stated below, the motion is denied.

Background

The complaint, affidavits, and other submitted documents provide the basis for the following facts and allegations. Dazey Corporation, a Kansas corporation located in New Century, Kansas, manufactures small household appliances. In early 1995, Dazey consulted with Michael J. Siegel of VITT Media to arrange a barter of its merchandise in exchange for broadcast and print media. Siegel eventually selected Broadcast Marketing Corporation (Broadcast) as Dazey's barter source. Jeffrey Wolfman, a New Jersey resident, is president and sole shareholder of Broadcast. Broadcast's offices and employees are located in New York.

Siegel, who lives and works in New York, initiated contact with Broadcast and Wolfman concerning Dazey's need for advertising and need to liquidate inventory. Neither Wolfman nor Broadcast had had any prior contact with Dazey. Negotiations between Siegel, on behalf of Dazey, and Wolfman, on behalf of Broadcast, commenced in April 1995. During the ensuing negotiations, Lewis A. Mendelson, executive vice-president of Dazey, had one or two telephone conversations with Wolfman from Dazey's office in Kansas. The two discussed Dazey's media requirements, specific media schedules, restrictions on the barter of certain merchandise, the value of the merchandise that would be shipped, and the price term in the contract. The value of the goods determined the amount of media credit Dazey would receive in exchange for the goods shipped.

Under the terms negotiated, Broadcast would direct Dazey to ship appliances to specified wholesalers or retailers, who would pay Broadcast for the goods received. In exchange for the shipped goods, Broadcast through Wolfman expressly promised that Dazey would receive broadcast and print advertising.

Broadcast created the form of contract used. Wolfman sent the proposed contract by facsimile to Mendelson in Kansas. On June 12, 1995, Mendelson executed the contract on behalf of Dazey and mailed it to Wolfman's attention at Broadcast. Wolfman countersigned the contract and on June 16, 1995, mailed the final copy along with a cover letter to Mendelson.

On June 19, 1995, an involuntary petition in bankruptcy was filed against Broadcast. On that same date, Wolfman directed Broadcast to send a purchase order to Dazey in which Dazey was directed to ship goods valued at $427,400. Dazey shipped the goods as directed.

On July 5, 1995, Broadcast filed a voluntary Chapter 11 petition for bankruptcy, listing almost $2.5 million in assets and more than $6 million in debts. On July 31, 1995, the bankruptcy court entered an order for relief under Chapter 11.

On September 5, 1995, Broadcast sent purchase orders Wolfman had signed to Dazey in which Dazey was directed to ship goods valued at $353,800. Dazey shipped the goods as directed. In response to the June and September purchase orders, Dazey shipped a total of $781,200 in goods.

On October 25, 1995, Dazey learned that Broadcast was in a bankruptcy proceeding. On that date, Wolfman told Mendelson that during June 1995, Broadcast was "in the process of planning a Chapter 11 when an involuntary Chapter 7 took place unexpectedly." (Doc. 1, Complaint, ¶ 25.)

Since the bankruptcy proceeding, Dazey has received media credits worth approximately $135,000. With regard to print, Dazey's advertising has been allocated to a highly restrictive list of publications with inferior placement in those publications. Contrary to the letter agreement, Dazey must pay cash for one-half of the cost of the print advertising. Additionally, Dazey has been unable to obtain television or radio media advertising.

On March 1, 1996, Dazey filed suit against Wolfman, alleging fraudulent promise of future events and fraud by silence, both Kansas common-law torts. Providing documentation of Broadcast's financial history, Dazey claims Wolfman misrepresented Broadcast's ability to fulfill its contractual obligations. Dazey seeks actual damages in the amount of $781,200 and punitive damages.

Wolfman subsequently filed the pending motion to dismiss for want of personal jurisdiction. The defendant contends dismissal is proper because he has never been a resident of Kansas; has never set foot in Kansas; and has never owned, used, or possessed property in Kansas. He maintains that he has never transacted business in Kansas and has never engaged in solicitation or service activities within Kansas. He asserts that no products, materials, or things he has processed, serviced or manufactured have been used or consumed within Kansas during the ordinary course of trade or use. Wolfman declares that he has never committed a tort in Kansas.

Legal Standards

A party invoking the jurisdiction of the federal courts has the burden of proving that federal jurisdiction exists. Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir.1995); Raytheon Aircraft Credit Corp. v. Pal Air Int'l, Inc., 923 F.Supp. 1408, 1414 (D.Kan. 1996). In a diversity action, the federal court determines whether it has personal jurisdiction over a nonresident defendant under the law of the forum state, Kansas. Rambo v. American S. Ins. Co., 839 F.2d 1415, 1416 (10th Cir.1988); Raytheon Aircraft Credit Corp., 923 F.Supp. at 1414; Slawson v. Hair, 716 F.Supp. 1373, 1375 (D.Kan.1989). An analysis of personal jurisdiction involves a two-prong test. Under the first prong, the defendant's conduct must fall within the Kansas Long-Arm Statute, K.S.A. § 60-308(b). The second prong of the test concerns whether a defendant has had sufficient minimum contacts with the forum state to comport with due process requirements. Key Indus., Inc. v. O'Doski, Sellers & Clark, Inc., 872 F.Supp. 858, 861 (D.Kan.1994); Slawson, 716 F.Supp. at 1375; see International Shoe Co. v. State of Wash., 326 U.S. 310, 319, 66 S.Ct. 154, 159, 90 L.Ed. 95 (1945).

In opposing a motion to dismiss for lack of personal jurisdiction filed before trial, a plaintiff bears the burden of making a prima facie showing that these statutory and due process requirements are satisfied in order to permit the court to exercise personal jurisdiction over the defendant. Wenz, 55 F.3d at 1505; Carrothers Constr. Co. v. Quality Serv. & Supply, Inc., 586 F.Supp. 134, 135-36 (D.Kan.1984). The parties may submit affidavits and other documentary evidence for the court's consideration. Thermal Insulation Sys., Inc. v. Ark-Seal Corp., 508 F.Supp. 434, 437 (D.Kan.1980). Well-pled facts in the complaint, as distinguished from mere conclusory allegations, are accepted as true to the extent the defendant's affidavits do not controvert the allegations. Wenz, 55 F.3d at 1505; Behagen v. Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th Cir.1984); Mitchell v. King, 537 F.2d 385, 386 (10th Cir.1976). If the parties submit conflicting affidavits, all factual disputes are resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the defendant's contrary presentation. Behagen, 744 F.2d at 733. The plaintiff is entitled to the benefit of any factual doubts. Ammon v. Kaplow, 468 F.Supp. 1304, 1309 (D.Kan.1979).

Kansas Long-Arm Statute

Dazey argues that Wolfman's conduct falls within the purview of subsection (b)(2) of the Kansas Long-Arm Statute, which provides:

(b) Submitting to jurisdiction process. Any person, whether or not a citizen or resident of this state, who in person or through an agent or instrumentality does any of the acts hereinafter enumerated, thereby submits the person and, if an individual, the individual's personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of these acts:

. . . . .

(2) commission of a tortious act within this state.

K.S.A. § 60-308(b)(2). Dazey asserts that, in order to satisfy subsection (b)(2), a plaintiff only need establish that the defendant committed fraudulent acts causing injury in Kansas. Dazey notes that courts have not construed subsection (b)(2) to require the presence of the defendant in Kansas or the commission of the alleged tortious act in Kansas. See Blue Moon Licensing, Inc. v. Gregorek, 906 F.Supp. 603, 605 (D.Kan.1995) (citing Ling v. Jan's Liquors, 237 Kan. 629, 633, 703 P.2d 731 (1985)) ("Although [the defendant] has never done business in Kansas, [its] conduct allegedly caused injury ... in Kansas and, therefore, the alleged tort is deemed to have occurred in Kansas."); see also Wegerer v. First Commodity Corp., 744 F.2d 719 (10th Cir.1984) (applying Kansas law); Kemper v. Rohrich, 508 F.Supp. 444 (D.Kan.1980); J.E.M. Corp. v. McClellan, 462 F.Supp. 1246 (D.Kan.1978). Dazey maintains it has established a prima facie case that Wolfman made fraudulent statements that injured the plaintiff in Kansas.

Wolfman disputes the automatic assertion of personal jurisdiction under subsection (b)(2) based upon the alleged commission of fraudulent activity outside Kansas causing injury within Kansas. In support, the defendant relies upon Blue Beacon Int'l, Inc. v. American Truck Washes, Inc., 866 F.Supp. 485 (D.Kan.1994), in which Judge Saffels concluded that the defendant was not subject to jurisdiction under subsection (b)(2) because the plaintiff failed to establish that the defendant engaged in even one single, purposeful act and because if harm had occurred, that harm occurred...