Finance Co. of America v. BankAmerica Corp.

• Citation: 493 F. Supp. 895
• Decision Date: 01 July 1980
• Docket Number: Civ. No. Y-79-1959.
• Parties: The FINANCE COMPANY OF AMERICA v. BANKAMERICA CORPORATION et al.
• Court: U.S. District Court — District of Maryland

493 F. Supp. 895

The FINANCE COMPANY OF AMERICA v. BANKAMERICA CORPORATION et al.

Civ. No. Y-79-1959.

United States District Court, D. Maryland.

July 1, 1980.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Paul M. Vettori, Baltimore, Md., for plaintiff; Alfred H. Moses, Washington, D. C., and Gary R. Roberts, Washington, D. C., of counsel.

David F. Albright, Franklin T. Caudill, William L. Hallam, Baltimore, Md., for defendants; Milton W. Schlemmer, and Nancy E. Martin, San Francisco, Cal., of counsel.

JOSEPH H. YOUNG, District Judge.

Plaintiff, the Finance Company of America (FCA) has brought suit under the Lanham Act, 15 U.S.C. § 1051, et seq. alleging that defendants' use of the trade name and service mark "FINANCEAMERICA" (or "FinanceAmerica") constitutes a false representation of services in interstate commerce and also violates state law. The defendants in this case are BankAmerica Corporation (FinanceAmerica-parent), its wholly owned subsidiary, and FinanceAmerica Corporation (FinanceAmerica-Maryland), and FinanceAmerica Private Brands, Inc. which are in turn wholly owned subsidiaries of FinanceAmerica-parent. FinanceAmerica Commercial Corporation, which was originally a defendant, changed its corporate name to BA Business Credit Corporation, thus prompting plaintiff to move for dismissal without prejudice of its claim against that corporation. In addition, plaintiff has indicated its intention to add as a defendant FinanceAmerica Capital Corporation, another subsidiary of FinanceAmerica-parent.

Personal jurisdiction over FinanceAmerica-Maryland is conceded. The other defendants have filed motions to dismiss claiming this Court lacks personal jurisdiction over them. In the alternative, the defendants argue that venue is improper. After reviewing the briefs of counsel, as well as the materials submitted in support of jurisdiction, this Court has concluded that there is personal jurisdiction over the defendants and that venue is proper.

Selecting a Standard for Deciding the Personal Jurisdiction Question.

The parties have assumed that state law governs the personal jurisdiction inquiry. Although this appears to be the rule in this Circuit, Gkiafis v. Steamship Yiosonas, 342 F.2d 546 (4th Cir. 1965), it has not received universal endorsement and therefore warrants some reexamination.

Congress has not provided for nationwide service of process. Rather, in cases in which a defendant does not have an agent within the state, Fed.R.Civ.P. 4(d)(7) authorizes service of process in any manner authorized by the law of the state in which the district court is located. But, as noted in an early case also arising under the Lanham Act, the rule "sanctions service on a foreign corporation by the method prescribed by the forum state law. There is, however, no such unanimity of opinion on the question of whether amenability to process is to be determined by applying state standards as they are limited by concepts of due process, or by applying federal 'general law' concepts." Bar's Leaks Western, Inc. v. Pollock, 148 F.Supp. 710, 712 (N.D.Cal.1957) (footnotes omitted). In general, federal courts have decided in diversity cases that "the policy underlying the doctrine of intra-state uniformity . . . seems to require the application of state standards . . .." Id. See also United States v. First National City Bank, 379 U.S. 378, 85 S.Ct. 528, 13 L.Ed.2d 365 (1965); and Arrowsmith v. U.P.I, 320 F.2d 219 (2d Cir. 1963). A number of courts have noted that this policy is absent in federal question cases. See, e. g., Bar's Leaks, supra, at 713; Arrowsmith, supra, at 228, n.9. Moreover, application of state standards in such cases engenders the anomalous result "that the jurisdiction of federal courts dealing with federal questions will vary from state to state." Gkiafis, supra, at 549. See also PPS, Inc. v. Jewelry Sales Representatives, Inc., 392 F.Supp. 375 (S.D.N.Y.1975). Nevertheless, most federal courts have applied state standards in deciding personal jurisdiction issues in federal question cases. See, e. g., Bartlett-Collins Co. v. Surinam Navigation Co., 381 F.2d 546 (10th Cir. 1967); and Honda Associates, Inc. v. Nozawa Trading, Inc., 374 F.Supp. 886 (S.D.N.Y. 1974). Some courts, however, have adopted a federal standard. See e. g., PPS, Inc., supra; Edward J. Moriarty & Co. v. General Tire & Rubber Co., 289 F.Supp. 381 (S.D. Ohio 1967).

In sum, it would appear that application of a federal standard would be more sensible. The venue statute would seem to provide adequate safeguards against vexatious lawsuits. Reliance on the venue statute, 28 U.S.C. § 1391, which provides that suits may be brought in the district in which the claim arose, would foreclose the possibility which exists in the present scheme that all defendants might not be subject to suit in the same district. This Court, however, feels compelled to follow the rule in this Circuit. Therefore, the Maryland Long-Arm Statute, Md.Cts. & Jud.Proc.Code Ann. § 6-103 governs the inquiry in this case.

Which Provisions of the Long-Arm Statute May be Considered in This Case.

In its complaint, plaintiff did not specify the subsection of the Long-Arm Statute on which it intended to reply. Rather, it alleged that each of the defendants "transacts business and/or performs financial services in the State of Maryland." With the exception of the acts constituting the alleged infringement, the plaintiff also did not allege with any specificity the defendants' contacts with the forum state. It is defendants' contention that plaintiff is limited to proving jurisdiction under § 6-103(b)(1) which provides that "a court may exercise personal jurisdiction over a person, who directly or by an agent . . . transacts any business or performs any character of work or service in the State . . .." Defendants base this contention on the ground that "the complaint must state on its face the grounds for the Court's jurisdiction." Haynes v. James H. Carr, Inc., 307 F.Supp. 1228, 1230 (E.D.Va.1969), aff'd 427 F.2d 700 (4th Cir.), cert. denied, 400 U.S. 942, 91 S.Ct. 238, 27 L.Ed.2d 245 (1970). Although this language would appear to support defendants' contention, Haynes did not deal with a situation in which the jurisdictional facts proved did not correspond to those alleged as is true in the instant case. Rather, Haynes dealt primarily with the plaintiff's failure to provide adequate factual support for personal jurisdiction. The other case cited in support of defendants' contention is Lehigh Valley Industries, Inc. v. Birenbaum, 527 F.2d 87 (2d Cir. 1975). The court in that case, however, merely held that the trial court did not abuse its discretion in denying discovery to establish personal jurisdiction when the allegations of jurisdictional facts were vague and conclusory. Id. at 94. Thus, this case supplies only tangential support for defendant's contention.

For a number of reasons, this Court finds defendants' contentions in this regard without merit. First, it would be unreasonable to demand that a plaintiff allege with specificity the defendants' contacts with the forum state before discovery has taken place. Second, the proposed rule is inconsistent with the spirit of Fed.R.Civ.P. 15 relating to amendment of pleadings. Rule 15(a) states that a party may amend his pleading as a matter of course before a responsive pleading is served. Thus, the plaintiff could have amended its complaint to allege the jurisdictional facts in more detail which would have mooted the defendants' contention. Also, Rule 15(b) provides for amendment of pleadings to conform to the evidence. There is no evidence that defendants objected to the scope of plaintiff's discovery to establish jurisdictional facts. Therefore, they implicitly consented to such amendment of the pleadings.

In any case, it would appear that the pleadings in the complaint were sufficient to notify the defendants that the plaintiff intended to rely on b(3) and (4) providing for personal jurisdiction over a party who either "causes tortious injury in the State by an act or omission in the State or. . causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from goods, food, services, or manufactured products used or consumed in the State." The Lanham Act violations alleged by the plaintiff are properly classified as tort claims, United Merchants and Manufacturers, Inc. v. David & Dash, Inc., 439 F.Supp. 1078 (D.Md.1977), and the defendant therefore was on notice that the plaintiff might rely upon these provisions.

What Evidence May the Court Consider in Ruling on the Motion to Dismiss.

In addition to suggesting that the Court could only consider certain legal theories utilized by FCA to establish personal jurisdiction, the defendants have also tried to limit the submissions in support of that effort that may be considered. More specifically, defendants have filed a motion to strike certain unauthenticated documents. Defendants also urge that deposition testimony taken in another proceeding involving FCA and BankAmerica is not admissible on the jurisdiction issue.

The exhibits sought to be excluded are Attachments A through G to plaintiff's memorandum in opposition to the motion to dismiss and discovery exhibits 46, 47, and 49. The attachments include a copy of a page of the Annapolis "yellow pages" telephone directory, two BankAmerica internal reports concerning the selection and promotion of the "FinanceAmerica" trade name and service mark, BankAmerica's application to the Patent and Trademark Office to register the service mark, an excerpt from the 1979 BankAmerica Annual Report, and excerpts from depositions taken in that related proceeding. Discovery exhibit 46, which was objected to during the deposition of Mr. Browne, the...