Fairview Mach. & Tool Co. v. Oakbrook Intern.

• Decision Date: 21 July 1999
• Docket Number: No. CIV.A. 99-30045-MAP.,CIV.A. 99-30045-MAP.
• Citation: 56 F.Supp.2d 134
• Court: U.S. District Court — District of Massachusetts
• Parties: FAIRVIEW MACHINE & TOOL CO., INC., Plaintiff, v. OAKBROOK INTERNATIONAL, INC. & Nuway Paper, L.L.C., Defendants.

56 F.Supp.2d 134

FAIRVIEW MACHINE & TOOL CO., INC., Plaintiff, v. OAKBROOK INTERNATIONAL, INC. & Nuway Paper, L.L.C., Defendants.

No. CIV.A. 99-30045-MAP.

United States District Court, D. Massachusetts.

July 21, 1999.

Robert L. Leonard, Doherty, Wallace, Pillsbury & Murphy, James J. Bregianes, Doherty, Wallace, Pillsbury & Murphy, P.C., Springfield, for Fairview Machine & Tool, Co., Inc., Plaintiffs.

Kevin C. Maynard, Bulkley, Richardson & Gelinas, Springfield, Ronald C. Spradley, Spradley & Riesmeyer, Kansas City, Mo, for Oak Brook International, Inc., Defendants.

MEMORANDUM REGARDING DEFENDANTS' MOTION TO DISMISS OR IN THE ALTERNATIVE TO TRANSFER VENUE, AND PLAINTIFF'S MOTION TO TAKE DISCOVERY

(Docket Nos. 6, 11)

PONSOR, District Judge.

I. INTRODUCTION

This case arises out of the defendants' refusal to make final payments of approximately $400,000 for machinery they ordered from plaintiff. Defendants, non-Massachusetts businesses, move to dismiss on the ground that this court does not have personal jurisdiction over them. Alternatively, defendants move to transfer venue to the Western District of Michigan as a matter of convenience. In the event that the court is inclined to allow the motion to dismiss, plaintiff moves to take discovery relevant to its opposition to dismissal.

For the reasons set forth below, this court will deny the motion to dismiss, deny the motion to transfer venue, and deny the motion to take discovery.

II. FACTS AND PROCEEDINGS

Fairview Machine and Tool Company ("plaintiff") is a Massachusetts corporation with approximately fifty employees that produces complex machinery used in the manufacture of paper products. Defendant Nuway is a Delaware company with its headquarters in Chicago, Illinois; defendant Oakbrook is an Illinois corporation (collectively "defendants"). Robert K. Regan is the president and one of two owners of Nuway; he is also the president and owner of Oakbrook.

In 1996, Nuway planned to start a paper manufacturing facility in Benton Harbor, Michigan that would produce lightweight coated paper (referred to in the industry as "LWC"). Production of LWC involves numerous pieces of interdependent equipment on a manufacturing line.

Regan contracted with the Kohler Coating Machinery Corporation, which is based in Ohio, to furnish some machinery for the LWC manufacturing line and to provide overall project management for the installation of the manufacturing line at the Benton Harbor plant.

Kohler, which had prior business dealings with plaintiff, contacted plaintiff about the possibility of producing machinery for the "calendering system component" of an LWC line, and on November 12, 1996, plaintiff sent a written proposal to Kohler. (Docket No. 12, Exhibit 1). At that point, Kohler had not identified either Nuway or Oakbrook as the potential customer for plaintiff's machinery. Eventually, however, Kohler asked plaintiff to send a more detailed proposal for the paper manufacturing machinery to Oakbrook in Illinois. (Docket No. 8 at 2).

On February 7, Regan telephoned a Fairview representative, Bruno Raynes, to accept the proposal. (Docket No. 12). Six days later, in his capacity as Oakbrook's CEO, Regan sent Fairview a purchase order. (Docket No. 12, Exhibit 5). Communications between the parties concerning the contract continued, and plaintiff sent Nuway a revised agreement on March 17, 1997. Under the revised agreement, the machinery was to be shipped "F.O.B. Chicopee, Massachusetts," meaning that plaintiff's delivery obligations would be complete when the machinery was made available to a carrier in Chicopee, and the defendants were to be notified to inspect the machinery prior to shipment. The price of the machinery was approximately $1,982,500, to be paid in several installments: 25% with the purchase order, 25% on production release, 25% on shipment, 15% on delivery and inspection at defendants' plant, and 10% on acceptance. (Docket No. 12, Exhibit 10).

Plaintiff constructed the machinery in Chicopee, Massachusetts for approximately eleven months. Significantly, on at least two occasions, Nuway representatives visited plaintiff's facility in Massachusetts in connection with the construction of the calendering system equipment. First, on July 30, 1997, Mark Baybos, a Nuway systems administrator in the Benton Harbor plant, attended a project review meeting with representatives of plaintiff and Kohler at plaintiff's Chicopee facility. (Docket No. 16). Second, Dennis Forrester, the plant manager for Nuway's Benton Harbor facility, traveled to plaintiff's Chicopee plant on September 18, 1997 to check on the status of the manufacture of the calender system. (Docket No. 9). During his visit, Forrester met with plaintiff's project manager for the Nuway machinery. According to Forrester, the purpose of his visit was "to determine the status of the project, whether or not there were going to be any problems with the manufacture or delivery of the calender and to report back to my superiors at Nuway Paper." (Id.).

The defendants also made telephone calls and sent over forty faxes and letters to plaintiff in Massachusetts relating to the machinery during the construction process, and sent checks totaling more than $1,500,000 in partial payment for the machinery to Massachusetts. (Docket No. 11 at 11). In addition, at least seven Kohler representatives visited plaintiff's facility or attended meetings there to review the construction.

Eventually, problems arose that delayed the Benton Harbor plant from becoming fully operational on schedule. Because of these problems, which defendants attributed at least in part to plaintiff, Nuway did not pay the last two invoices from plaintiff, which totaled about $400,000.

Plaintiff then filed this action in Hampden County Superior Court alleging breach of contract, quantum meruit, promissory estoppel, misrepresentation, and unfair trade practices. Defendants removed the case to federal court in March 1999 and now seek to dismiss or to transfer venue.

III. DISCUSSION

A. Motion to Dismiss

Defendants move to dismiss, arguing that their contacts with Massachusetts are insufficient to confer personal jurisdiction. The First Circuit recognizes two types of personal jurisdiction, general and specific. See United Elec. Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1088 (1st Cir.1992). "General jurisdiction exists when the litigation is not directly founded on the defendant's forum-based contacts, but the defendant has nevertheless engaged in continuous and systematic activity, unrelated to the suit, in the forum state." Id. Here, plaintiff does not assert general jurisdiction and defendants clearly have not engaged in continuous and systematic activity in Massachusetts. General jurisdiction is therefore lacking.

Specific jurisdiction exists where "the cause of action arises directly out of, or relates to, the defendant's forum-based contacts." Id. at 1088-89. "The proper exercise of specific in personam jurisdiction hinges on satisfaction of two requirements: first, that the forum in which the federal district court sits has a long-arm statute that purports to grant jurisdiction over the defendant; and second, that the exercise of jurisdiction pursuant to that statute comports with the strictures of the Constitution." Pritzker v. Yari, 42 F.3d 53, 60 (1st Cir.1994).

The Massachusetts long-arm statute provides that "[A] court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action in law or equity arising from the person's (a) transacting any business in this commonwealth; ..." Mass. Gen. Laws ch. 223A, § 3. The physical presence of a defendant in Massachusetts is not required; rather, the court looks to whether a defendant "attempted to participate in the Commonwealth's economic life." Pleasant St. Corp., 960 F.2d at 1087.

Courts construe the Massachusetts "transacting any business" clause broadly. See Hahn v. Vermont Law Sch., 698 F.2d 48, 50 (1st Cir.1983); Bennett v. Jack Dennis Whitewater Trips, 925 F.Supp. 889, 894 (D.Mass.1996) (citation omitted). In Hahn, for example, the "transacting any business" provision was deemed satisfied where the defendant, Vermont Law School, had merely mailed application information and an acceptance letter to the plaintiff in Massachusetts. See Hahn, 698 F.2d at 51; see also Bond Leather Co. v. Q.T. Shoe Mfg. Co., 764 F.2d 928, 932 (1st Cir.1985) (finding defendant's "activities are within the reach of § 3(a)" where defendant, which guaranteed a Massachusetts plaintiff payment for goods, mailed four letters to Massachusetts and received a telephone call from plaintiff in the course of negotiations); L & P. Converters, Inc. v. H.M.S. Direct Mail Serv., Inc., 634 F.Supp. 365, 366 (D.Mass.1986) (finding that defendant transacted business in Massachusetts within the meaning of section 3(a) where it had "done nothing to participate in the Massachusetts economy beyond placing the phone orders from New York.")

In this case, where two of the defendants' employees, including Nuway's plant manager, visited plaintiff's facility in Massachusetts and where the defendants sent substantial correspondence, including approximately $1,500,000, into the Commonwealth, the defendants transacted business within the meaning of the broadly construed Massachusetts long-arm statute. Thus, the first requirement for specific personal jurisdiction over the defendants is satisfied.

The inquiry therefore turns to whether the exercise of personal jurisdiction over the defendants comports with constitutional requirements. Specifically, the Due Process Clause of the United States Constitution requires that there be sufficient minimum contacts between a defendant and the forum. The First Circuit's minimum contacts analysis rests on three factors: first, plaintiff's claims underlying this litigation must relate to defendants' Massachusetts contacts; second, defendant...