Eagle Traffic Control, Inc. v. James Julian, Inc.

• Decision Date: 18 July 1996
• Docket Number: No. 96-CV-2454.,96-CV-2454.
• Parties: EAGLE TRAFFIC CONTROL, INC., v. JAMES JULIAN, INC., James Julian, Inc. of Delaware and James J. Julian.
• Court: U.S. District Court — Eastern District of Pennsylvania

933 F. Supp. 1251

EAGLE TRAFFIC CONTROL, INC., v. JAMES JULIAN, INC., James Julian, Inc. of Delaware and James J. Julian.

No. 96-CV-2454.

United States District Court, E.D. Pennsylvania.

July 18, 1996.

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Joseph A. McGinley, Lavin, Coleman, Finarelli and Gray, Philadelphia, PA, for plaintiff.

Stanley C. Macel, III, Connolly, Bove, Lodge, & Hutz, Wilmington, DE, for defendants.

MEMORANDUM

JOYNER, District Judge.

Plaintiff Eagle Traffic Control, Inc. ("Eagle") has brought this action alleging violations of several Delaware state laws as well as the federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-68 (1984 & Supp.1996) ("RICO") by Defendants James Julian, Inc. ("JJI"), James Julian, Inc. of Delaware ("JJID") and James J. Julian. JJID and Mr. Julian seek to be dismissed from this action on the ground that they are not subject to personal jurisdiction in this Court. All three Defendants seek to dismiss the complaint for failure to state a claim upon which relief may be granted, or alternatively, to dismiss or transfer the action to the District of Delaware for improper venue or under the doctrine of abstention.

Factual Background

Eagle is a Pennsylvania corporation in the business of providing traffic control services to construction companies.¹ Both JJI and JJID are Delaware corporations in the business of doing highway construction work. Mr. Julian is an individual residing in Delaware and is the area manager for each corporation as well as the Vice-President of JJID. Between 1993 and 1995, Eagle entered into two subcontracts with JJI and one subcontract with JJID to provide products, services, labor and goods on three different highway construction projects in Delaware. JJI and JJID were the prime contractors hired by the Delaware Department of Transportation ("DelDOT"). Eagle also entered into two subcontracts with JJI to perform work on two highways in Pennsylvania.

Pursuant to the Delaware subcontracts, Eagle was to be paid contract fees during the course of each contract as well as "retainages" that were to be withheld until the end of each project. Eagle alleges that JJI and JJID repeatedly misrepresented to DelDOT that they were paying Eagle when, in fact, Mr. Julian was directing them not to. Defendants allegedly made these misrepresentations in order to continue receiving funds from DelDOT. With respect to the Pennsylvania subcontracts, Eagle alleges that JJI has breached each subcontract. JJI allegedly did this in order to strengthen its bargaining power with respect to the Delaware subcontracts.

Finally, the Complaint alleges that Defendants have committed fraud regarding a jury verdict Eagle won in this Court against a third party called Addco. Eagle alleges that JJI has wrongfully charged Eagle the precise amount Eagle won in the other case in an attempt to prevent Eagle from recognizing the benefit of its verdict.

DISCUSSION

1. PERSONAL JURISDICTION

JJID and Mr. Julian have challenged Eagle's assertion of personal jurisdiction over them. Once challenged, the burden is on plaintiff to prove personal jurisdiction. Grand Entertainment Group v. Star Media Sales, 988 F.2d 476, 482 (3d Cir.1993). Prior to trial, a plaintiff need only make a prima facie showing of jurisdiction and courts must take the plaintiff's facts as true for the purposes of the analysis. Mellon Bank PSFS Nat'l Ass'n v. Farino, 960 F.2d 1217, 1223 (3d Cir.1992); National Cathode Corp. v. Mexus Co., 855 F.Supp. 644, 647 (S.D.N.Y. 1994).

Federal courts have personal jurisdiction over non-resident defendants to the extent permitted in the state in which the federal court sits. Fed.R.Civ.P. 4(e). Therefore, our first step is to examine Pennsylvania law. Relevant to this action, Pennsylvania's longarm statute provides general personal jurisdiction over a corporation if that corporation is incorporated under or qualified as a foreign corporation under the laws of the Commonwealth or if it has consented to suit in the Commonwealth. 42 Pa.Cons.Stat.Ann. § 5301(a)(2)(i & ii) (1981 & Supp.1995). Pennsylvania grants specific personal jurisdiction over a person for causes of action arising from that person's activities within the forum. 42 Pa.Cons.Stat.Ann. § 5322(a).

The United States Supreme Court, in turn, has defined the due process limit of Constitutionally permitted non-resident jurisdiction in a series of decisions including International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) and Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). It has held that jurisdiction is proper when:

the contacts proximately result from actions by the defendant himself that create a `substantial connection' with the forum State. Thus where the defendant `deliberately' has engaged in significant activities within a State, or has created `continuing obligations' between himself and residents of the forum, he manifestly has availed himself of the privilege of conducting business there.

Burger King, 471 U.S. at 475-76, 105 S.Ct. at 2184.

Accordingly, there must be some affirmative act "by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). These acts must be "such that the defendant should reasonably anticipate being haled into court" in the forum state. World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. The Third Circuit has repeatedly held that courts should take a "highly realistic" view when deciding whether to assert personal jurisdiction over a nonresident defendant. Mellon Bank, 960 F.2d at 1224; Grand Entertainment, 988 F.2d at 482.

A. Mr. Julian

Turning to this action, Eagle bases personal jurisdiction over Mr. Julian on his alleged contempt of court in attempting to defraud Eagle of the jury award it won here. Eagle concedes that there is no other basis for personal jurisdiction over Mr. Julian. Eagle cites two cases from other jurisdictions holding that personal jurisdiction exists over a person who knowingly and actively aids and abets a party in violating a court order on the basis of a "super contact" with that forum. Reebok Int'l, Ltd. v. McLaughlin, 49 F.3d 1387, 1391 (9th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 276, 133 L.Ed.2d 197 (1995); Waffenschmidt v. MacKay, 763 F.2d 711, 714 (5th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 794, 88 L.Ed.2d 771 (1986). Eagle maintains that Mr. Julian is in contempt of court for allegedly trying to defraud it out of its jury verdict.

Mr. Julian rightfully contests this argument. The cases cited by Eagle are not analogous to this action. In those cases, the courts exercised personal jurisdiction over the foreign parties so that they could proceed on contempt actions against them. Here, in contrast, there are and have been no contempt proceedings; rather, Eagle sues Mr. Julian for fraud. For this reason, even if we were to apply the "super contact" theory, Mr. Julian would not fit within its scope. Accordingly, personal jurisdiction cannot be based on this argument and he shall be dismissed from this action.

B. JJID

Eagle bases general personal jurisdiction over JJID on the ground that it is qualified to do business within this state as a foreign corporation. Pennsylvania's personal jurisdiction statute expressly grants jurisdiction in such an instance. JJID nonetheless contests personal jurisdiction by pointing to one of this Court's previous rulings, Romann v. Geissenberger Mfg. Corp., 865 F.Supp. 255 (E.D.Pa.1994).

There, we held that although a foreign corporation was qualified to do business in Pennsylvania, we had no jurisdiction over that corporation because it did not otherwise have "systematic and continuous contacts" with the Commonwealth. Id. at 260. We have re-examined that particular holding and find that it is in conflict with Third Circuit precedent and therefore, is not controlling in this instance.

The Third Circuit has ruled that based on Pennsylvania's jurisdiction statute, a foreign corporation is subject to suit in Pennsylvania even if its only contact with the state is its authorization to do business in Pennsylvania. Bane v. Netlink, Inc., 925 F.2d 637 (3d Cir. 1991). In the alternative, the Court held that pursuant to the then-current authorization statute, being authorized to do business in Pennsylvania carried with it consent to be sued in Pennsylvania because all authorized corporations had to designate the Secretary of State as their registered service agent. Id. at 640.

By the time we decided Romann, the authorization statute had been amended to make designation of an in-state registered agent optional. 15 Pa.Cons.Stat.Ann. § 4124(a)(4) (1995). We held that the statute's change was significant enough to affect Bane's precedential value. Upon re-examination, we do not find this to be so. The bottom line is that Pennsylvania's long-arm statute provides for personal jurisdiction when a foreign corporation takes the particular action of becoming authorized to do business in Pennsylvania.

The statute complies with due process because becoming authorized is an affirmative act "by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson, 357 U.S. at 253, 78 S.Ct. at 1240. Further, it paves the path for a situation in which the defendant "should reasonably anticipate being haled into court." World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. For these reasons, we find that JJID is subject to personal jurisdiction pursuant to 42 Pa.Cons.Stat.Ann. § 5301(a)(2)(i).

In the alternative,...