Industrial Carbon Corp. v. EQUITY AUTO & EQUIPMENT, Civ. A. No. 89-0182-A.

• Court: United States District Courts. 4th Circuit. United States District Court (Western District of Virginia)
• Writing for the Court: Howard C. McElroy, Abingdon, Va., for defendants
• Citation: 737 F. Supp. 925
• Parties: INDUSTRIAL CARBON CORPORATION, Plaintiff, v. EQUITY AUTO & EQUIPMENT LEASING CORPORATION and Dhafir D. Dalaly, Defendants.
• Decision Date: 23 May 1990
• Docket Number: Civ. A. No. 89-0182-A.

737 F. Supp. 925

INDUSTRIAL CARBON CORPORATION, Plaintiff,
v.
EQUITY AUTO & EQUIPMENT LEASING CORPORATION and Dhafir D. Dalaly, Defendants.

Civ. A. No. 89-0182-A.

United States District Court, W.D. Virginia, Abingdon Division.

May 23, 1990.

Russell M. Large, Grundy, Va., for plaintiff.

Howard C. McElroy, Abingdon, Va., for defendants.

MEMORANDUM OPINION

GLEN M. WILLIAMS, Senior District Judge.

The case is before the court on the defendants' motion to dismiss for lack of personal

737 F. Supp. 926

jurisdiction, or in the alternative, to transfer venue. The court has subject matter jurisdiction of the case pursuant to 28 U.S.C. § 1332

PROCEDURAL BACKGROUND

This action stems from a dispute over the financing of mining equipment between the plaintiff, Industrial Carbon Corporation ("Carbon"), a Virginia corporation, and the defendant, Equity Auto & Leasing Corporation ("Equity"), a Michigan corporation. Carbon filed this case in Buchanan County Circuit Court against Equity and Mr. Dhafir D. Dalaly, a Senior Vice President of Equity, alleging breach of contract, breach of fiduciary duty and fraud. Carbon seeks both compensatory and punitive damages. The case was removed to this court.

ANALYSIS

I.

Standard for Ruling on Motion to Dismiss

When a federal district court is ruling upon a defendant's motion to dismiss for lack of personal jurisdiction, solely on the basis of affidavits, the plaintiff is required only to present a prima facie case for personal jurisdiction.¹ However, where the defendant has provided evidence which denies facts essential for jurisdiction, the plaintiff must, under threat of dismissal, present sufficient evidence to create a factual dispute on each jurisdictional element which has been denied by the defendant and on which the defendant has presented evidence. Gemini Enterprises, Inc. v. WFMY Television Corp., 470 F.Supp. 559, 565 (M.D.N.C.1979). When conflicting facts are contained in the affidavits, they are to be resolved in the plaintiff's favor. Behagen, 744 F.2d at 733; Brown, 688 F.2d at 332 (citing United States Ry. Equip. Co. v. Port Huron & Detroit R.R., 495 F.2d 1127, 1128 (7th Cir.1974)).

Evidence Submitted by Plaintiff

The plaintiff has submitted evidence, the affidavit of Elzie Yates ("Yates Affidavit"), in support of the following facts regarding the jurisdictional issue which must be taken as true for the purposes of this motion. Mr. Yates was President of Carbon during the events in question.

Mr. Yates was first contacted by Mr. Street, a broker, who was to be paid by Equity, and was advised by Mr. Street that Equity was one of the largest auto leasing companies in the nation. He then met with Equity representatives, who convinced him that Equity would provide financing services to Carbon.

Equity sent to Mr. Yates a financing proposal or bid dated May 1, 1989, styled as a sale-leaseback proposal.² Equity proposed, inter alia, to buy certain equipment located in Buchanan County, Virginia and lease it to Carbon. The equipment was to remain in Buchanan County. On or about May 5, 1989, Mr. Yates called Dennis Lynch of Equity, at his office in Michigan, and stated that he wished to amend the proposal. Mr. Lynch agreed to the amendments and requested that Mr. Yates mail to Equity the deposit as required under the proposed contract. The same day, Mr. Yates signed the amended proposal in Bristol, Virginia and then forwarded one copy to Equity along with a deposit of $36,661.19.

The plaintiff alleges that a contract was entered into by Equity and Carbon and the Yates Affidavit asserts that an agent of Equity, Mr. Lynch orally agreed to the terms of the written proposal, as amended by Carbon. Equity contests this assertion

737 F. Supp. 927

and has offered evidence that Mr. Lynch never agreed to this. Affidavit of Dennis Lynch. However, as noted earlier, when ruling on a motion to dismiss for lack of personal jurisdiction solely on the basis of affidavits, the affidavits submitted by the plaintiff must be regarded as true

Presumably, Equity could renew its motion and have an evidentiary hearing on the issue of whether Mr. Lynch made such an agreement and thus executed a contract on behalf of Equity. Because of the possibility of a renewed motion and because the lack of an executed contract would not change the court's ruling on this motion, the court concludes that judicial economy would be promoted by assuming, for the purpose of ruling on this motion, that there was no executed contract and the court will accordingly make that assumption.

The above facts may be summarized as follows for purposes of the motion to dismiss. Equity offered, through a written proposal, to purchase equipment and to lease it to Carbon. At least some of the equipment was to be located in Western District of Virginia. The written proposal was altered by Mr. Yates and thus converted into a counter-offer, which was mailed to Equity, along with a deposit, for its acceptance. Equity never accepted the counter-offer but nonetheless kept the deposit.

Personal Jurisdiction Standard

Because the court has jurisdiction based on the diversity of citizenship of its litigants, the court must obtain personal jurisdiction over the defendants pursuant to the state law of the forum, which is Virginia. See Viers v. Mounts, 466 F.Supp. 187, 189 (W.D.Va.1979). Virginia, through its long-arm statute, allows Virginia courts to exercise personal jurisdiction over a defendant as to a cause of action arising from his "transacting any business" in Virginia. Va.Code.Ann. § 8.01-328.1. The Supreme Court of Virginia, in construing the "transacting business" provision, stated that the function of the long-arm statute was to provide for the exercise of personal jurisdiction over "non-residents who engage in some purposeful activity in Virginia to the extent permissible under the Due Process Clause of the Constitution of the United States." Nan Ya Plastics Corp. v. DeSantis, 237 Va. 255, 259, ...