Kreutter v. McFadden Oil Corp.
| Decision Date | 11 July 1986 |
| Parties | Albert E. KREUTTER, Respondent, v. McFADDEN OIL CORP., Harmony Drilling Co., Inc. and Burch Downman, Jr., Appellants, Donald J. Mumback, et al., Defendants. |
| Court | New York Supreme Court — Appellate Division |
Robshaw, Abramowitz & Tobia, P.C., by Philip Abramowitz, Buffalo, for appellants.
Damon & Morey, by F. James Kane, Jr., Buffalo, for respondent.
Before DILLON, P.J., and CALLAHAN, DENMAN, GREEN, and PINE, JJ.
Plaintiff alleges multiple causes of action stemming from his investment in an arrangement involving the purchase and leaseback of oil drilling equipment. Plaintiff transferred $70,000 to defendant Brian M. McFadden and Company, Inc. (McFadden and Co.), a Texas corporation licensed to do business in New York. McFadden and Co. had a contract with McFadden Oil Corp. (McFadden Oil), a Texas oil well developer wholly owned by Burch Downman, Jr. (Downman), a resident of Houston, Texas, to sell to investors shares in McFadden Oil's well drilling ventures. Although plaintiff was not purchasing a participation share but was entering into the sale-leaseback transaction, McFadden and Co., using the formula normally employed in the sale of participation shares, sent McFadden Oil a check representing plaintiff's investment minus its commission and expenses. McFadden Oil thereafter informed McFadden and Co. that it had transferred all equipment to Harmony Drilling Co. (Harmony), a wholly owned subsidiary, and directed McFadden and Co. to reissue the check to Harmony, as owner of the equipment. Plaintiff's investment was never acknowledged, and he seeks recovery of his expenditure and other relief.
A motion by McFadden Oil, Harmony and Downman for dismissal on jurisdictional grounds (CPLR 3211[a][8] ) was denied following a hearing at which Downman appeared specially (CPLR 320) and testified. Special Term found that the Texas defendants (McFadden Oil, Harmony and Downman) "purposefully availed themselves of the sales efforts of McFadden Co., their New York representative" and that "the activities of McFadden Co. in New York may properly be attributed to the Texas defendants for section 302 jurisdictional purposes (citations omitted)."
The order must be modified to grant the motions of defendants Downman and Harmony. In personam jurisdiction cannot be established over Downman; he is afforded protection by the fiduciary shield doctrine (see Laufer v. Ostrow, 55 N.Y.2d 305, 449...
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...Meet the Fiduciary Shield, 38 Stan.L.Rev. 813, 819-828) and by some of our appellate divisions (see, Kreutter v. McFadden Oil Corp., 122 A.D.2d 614, 504 N.Y.S.2d 915 [4th Dept.], lv. granted 69 N.Y.2d 606, 514 N.Y.S.2d 1023, 507 N.E.2d 319; Sheldon v. Kimberly-Clark Corp., 105 A.D.2d 273, 4......
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Kreutter v. McFadden Oil Corp.
...dismiss the complaint for want of jurisdiction and Supreme Court denied their motions after a hearing. The Appellate Division, 122 A.D.2d 614, 504 N.Y.S.2d 915, modified, sustaining jurisdiction over McFadden Oil but dismissing the actions against defendants Downman and Harmony. It held Dow......
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Kreutter v. McFadden Oil Corp.
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