Durkan Enterprises, Inc. v. COHUTTA BANKING

• Citation: 501 F. Supp. 350
• Decision Date: 10 December 1980
• Docket Number: Civ. A. No. C80-755A.
• Parties: DURKAN ENTERPRISES, INC. v. COHUTTA BANKING COMPANY, a Corporation of the State of Georgia, W. H. Whitley, Jerry L. Holmer, Randy A. Gordon, Robert L. Mcentire, W. W. Fincher, Jr., J. Tucker Brown, William Keith, Ralph England, and Cumberland Carpet Company, a Corporation of the State of Georgia.
• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Northern District of Georgia

501 F. Supp. 350

DURKAN ENTERPRISES, INC. v. COHUTTA BANKING COMPANY, a Corporation of the State of Georgia, W. H. Whitley, Jerry L. Holmer, Randy A. Gordon, Robert L. Mcentire, W. W. Fincher, Jr., J. Tucker Brown, William Keith, Ralph England, and Cumberland Carpet Company, a Corporation of the State of Georgia.

Civ. A. No. C80-755A.

United States District Court, N. D. Georgia, Atlanta Division.

December 10, 1980.

Jonathan Marks, New York City, for plaintiff.

A. Felton Jenkins, Jr., King & Spalding, Atlanta, Ga., for defendant.

ORDER

TIDWELL, District Judge.

The above-styled diversity matter is an action for wrongful repossession of certain equipment, malicious interference with business relations, and for malicious conspiracy to ruin the plaintiff's business in Georgia. Durkan Enterprises, Inc. ("Durkan"), a New York corporation with its principal place of business in New York, began making contractual commitments for the manufacture of carpets in Georgia in 1971. Durkan continued the process of having carpets manufactured in the Dalton-Chatsworth, Georgia area on a commission basis through various independent contractors until the fall of 1976 when Durkan purchased a carpet manufacturing plant in Chatsworth, Georgia. The purchase was financed by the Cohutta Banking Company. In April, 1978 a certain piece of tufting machinery was purchased with the proceeds of a loan from Cohutta to defendant Ralph England. Cohutta retained a security interest in the tufting machine which was used by Durkan and housed in its Chatsworth plant. This machine was repossessed in December, 1979 allegedly damaging the plaintiff's business and precipitating the filing of the instant action.

The complaint in this matter was filed in the United States District Court for the Southern District of New York on January 17, 1980. Subsequently, the Georgia defendants moved to dismiss the complaint for lack of personal jurisdiction. The United States Small Business Administration, initially a defendant, also moved for dismissal, or in the alternative, to transfer the action for improper venue. By stipulation of the plaintiff and the Small Business Administration, the Small Business Administration was dismissed without prejudice in April, 1980. Over the opposition of the Georgia defendants, the district court granted the plaintiff's motion to transfer the case to this district by order dated April 17, 1980.

The matter is currently before the court on the defendants' motion to dismiss this action or, in the alternative, grant summary judgment on the grounds that the plaintiff, a foreign corporation, did not obtain a certificate of authority to transact business in Georgia as required by Ga.Code Ann. § 22-1401 prior to commencing this action in violation of Ga.Code Ann. § 22-1421(b). It is undisputed that Durkan did not obtain a certificate of authority to transact business in Georgia until September 18, 1980, after the defendant's motion to dismiss was filed. The plaintiff does not dispute that it is required to comply with Ga.Code Ann. § 22-1421(b) when the basis for federal jurisdiction is diversity and the venue lies in a Georgia federal court. See A. S. International Corp. v. Salem Carpet Mills, Inc., 441 F.Supp. 125 (N.D.Ga.1977); R. N. Kelly Cotton Merchant, Inc. v. York, 379 F.Supp. 1075 (M.D.Ga.1973), aff'd, 494 F.2d 41 (5th Cir. 1974). Even where a case is originally filed in another district but is transferred to Georgia, as in the instant case, a foreign corporation must obtain a certificate of authority to transact business in Georgia prior to commencing the action unless that corporation is not required to obtain a certificate of authority under Ga. Code Ann. § 22-1401, the enforcement of the requirement would unreasonably burden interstate commerce, or the plaintiff has been "forced to pursue its case in a jurisdiction not of its own choosing." A. S. International Corp., supra at 126-27.

The plaintiff has failed to show that it fits within any of the statutorily enumerated exceptions to the certificate of authority requirement and the fact that the plaintiff was actually conducting a manufacturing operation within the State immediately prior to the commencement of this action indicates that the plaintiff was transacting business within Georgia. Ga.Code Ann. § 22-1401; DeKalb Cablevision Corp. v. Press Association, Inc., 141 Ga.App. 1, 232 S.E.2d 353 (1977); A. B. R. Metals & Services,...