Mac's Eggs, Inc. v. Rite-Way Agri Distributors

• Citation: 656 F. Supp. 720
• Decision Date: 06 January 1987
• Docket Number: Cause No. S85-312.
• Parties: MAC'S EGGS, INC., Plaintiffs, v. RITE-WAY AGRI DISTRIBUTORS, INC., et al., Defendants.
• Court: United States District Courts. 7th Circuit. United States District Court of Northern District of Indiana

656 F. Supp. 720

MAC'S EGGS, INC., Plaintiffs, v. RITE-WAY AGRI DISTRIBUTORS, INC., et al., Defendants.

Cause No. S85-312.

United States District Court, N.D. Indiana, South Bend Division.

December 11, 1986.

On Motion for Summary Judgment January 6, 1987.

COPYRIGHT MATERIAL OMITTED

John D. Walda, Thomas Herr, Fort Wayne, Ind., for plaintiffs.

Arthur G. Surgine, Jr., Fort Wayne, Ind., for Rite-Way Agri Distributors, Inc.

John R. Burns, III, Fort Wayne, Ind., for BODO Development and Meller Batterien.

MEMORANDUM and ORDER

MILLER, District Judge.

I. Introduction

This matter is before the court on defendant Bodo Degenhardt's motion to dismiss, which raises three separate theories and will be treated as three separate motions: (1) a motion to dismiss for want of jurisdiction of the person, Fed.R.Civ.P. 12(b)(2); (2) a motion to dismiss the implied warranties claims for failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6); and (3) a motion to dismiss the products liability claims for failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6). Also pending is a motion for sanctions against Mr. Degenhardt filed pursuant to Fed.R. Civ.P. 56(g) by plaintiff Mac's Eggs, Inc. on August 25, 1986.

II. Factual Background

A.

Mac's Eggs commenced this action by filing a complaint naming Rite-Way Agri Distributors, Inc. ("Rite-Way") and an entity referred to as "Meller USA" as defendants. Mac's Eggs alleged that Rite-Way and Meller USA breached implied warranties of merchantability and fitness for a particular purpose when they sold defective poultry cage equipment to Mac's Eggs. Mac's Eggs also asserted a products liability claim, and alleged that Rite-Way negligently installed the poultry cage equipment. Mac's Eggs sought compensatory damages in the amount of $50,000.00 on each of the three counts in the complaint.

Both defendants named in that complaint answered in a timely fashion. Meller USA indicated in its answer that it was not the entity involved in the transactions alleged in the complaint; the answer implied that some entity was involved in the sale of the poultry equipment, but that "Meller USA" was not that entity.

Mac's Eggs was granted leave to amend its complaint. The first amended complaint was identical to the original complaint in all respects, except that Mr. Degenhardt (who was alleged to be doing business as "Meller Batteries USA") was substituted for "Meller USA". In its answer to that first amended complaint, Meller Batteries USA denied that "Bodo Degenhardt d/b/a Meller Batteries USA sold certain equipment to Rite-Way Agri Distributors, Inc.".

Leave was granted to file a second amended complaint that was identical to the first amended complaint, except that it named Meller Batterien as a defendant, and alleged that Meller Batterien manufactured a defective product and breached implied warranties of merchantability and fitness for a particular purpose. Bodo Degenhardt, d/b/a Meller Batteries USA, remained as a defendant.

B.

Mr. Degenhardt moved to dismiss the second amended complaint, asserting three grounds for dismissal: (1) lack of jurisdiction over Mr. Degenhardt's person; (2) failure to state a claim for breach of implied warranties; and (3) failure to state a claim under Indiana's products liability statute. Mr. Degenhardt filed his own affidavit, in which he denied acting as either a factory representative or as a distributor for Meller Batterien, and asserted that he only acted as a "facilitator for the importation of products" produced by the West German company. Mr. Degenhardt also stated in his affidavit that:

Prior to the date of this litigation, I had never done any business with Mac's Eggs, Inc. nor had I ever been in the State of Indiana for business purposes....

I do not own any property in Indiana. I do not lease or otherwise have any interest in any property or office in the State of Indiana. I do not have any employees who are located in Indiana nor do I have any employees or agents who regularly travel to the State of Indiana. To the best of my knowledge and belief, I do not conduct any business in the State of Indiana.

Mac's Eggs responded to Mr. Degenhardt's motion by filing four affidavits relating to Mr. Degenhardt's contacts with the State of Indiana:

— Bruce McDaniel, vice-president of Mac's Eggs, stated that he met three times with Mr. Degenhardt at Mac's Eggs' Atwood, Indiana location relating to Meller poultry equipment: in June, 1984, Mr. Degenhardt visited Mac's Egg Farm "to measure the poultry house to see how the Meller Equipment would fit in"; in September, 1984, Mr. Degenhardt returned to Mac's Eggs' Indiana farm "to assess the problems experienced with the Meller Equipment"; in February, 1986, Mr. Degenhardt again discussed problems with the Meller equipment and "replaced six (6) or seven (7) heat sense switches on the motors of the Meller egg collectors". Mr. McDaniel further stated that Indiana is the second largest egg-producing state in the United States, that he was aware of Meller equipment at two other poultry farms in Indiana, and that Mr. Degenhardt never stated that he was not an authorized agent for Meller Batterien.

— William L. Bouse, marketing manager of poultry systems for Farm Tech, Inc. of Leesburg, Indiana stated that he met Mr. Degenhardt at a poultry convention held in Fort Wayne, Indiana in 1982, when Mr. Degenhardt held himself out to be a representative of Meller¹, and offered Mr. Bouse employment.

— Brock Van Meter, president of Farm Tech, Inc. of Leesburg, Indiana, a retailer of farm equipment, stated that he met with Mr. Degenhardt on three occasions in 1986 to discuss a Meller franchise in Indiana.

— James Den Bleyker², an employee of Rite-Way prior to January 1, 1985, stated that he met with Mr. Degenhardt in May and June of 1984 within the State of Indiana. On those occasions, Mr. Den Bleyker and Mr. Degenhardt visited Scott Egg Farm and Mac's Eggs Farm to discuss installation of Meller equipment, debts owed, and operating problems.

Mac's Eggs also submitted a photocopy of an advertisement for Meller Cage Systems that appeared in the May, 1986 edition of The Poultry Tribune, in which Mr. Degenhardt was named as an "importer/distributor".

In reply, Mr. Degenhardt filed a second affidavit that reasserted his statements in his first affidavit and addressed the factual disputes raised by Mac's Eggs' submission. Mr. Degenhardt stated that before December 31, 1983 he had been a Meller Batterien distributor for a district that included Wisconsin, Iowa and other adjoining states, but not Indiana. Mr. Degenhardt admitted meeting Mr. Bouse at the poultry convention in Fort Wayne, Indiana in 1982, but stated that he was not in Indiana as an authorized distributor of Meller Batterien on that occasion, and that he lacked authority to offer Mr. Bouse employment with the West German company. Mr. Degenhardt stated that he discontinued his distributorship on December 31, 1983, but continued with Meller Batterien as a "facilitator" for the importation of Meller products. Mr. Degenhardt agreed that he came to Indiana at the times asserted by Messrs. McDaniel, Van Meter, and Den Bleyker, but claimed that he only appeared as an interpreter for Meller's West German representatives, as a facilitator for importation, and as a representative for the purpose of collecting debts and resolving problems. Mr. Degenhardt asserted that to the extent Meller's advertisement contradicted his assertions, it was false.

Mac's Eggs moved for sanctions, claiming that Mr. Degenhardt had made affidavits in bad faith. Mac's Eggs supported its motion with an affidavit for attorneys fees expended in uncovering Mr. Degenhardt's contacts with Indiana. After Mr. Degenhardt responded, Mac's Eggs supplemented its motion for sanctions and its response to Mr. Degenhardt's dismissal motion, consisting of photocopies of several telexes between Rite-Way and Meller Batterien that Rite-Way had produced in discovery which refer to Mr. Degenhardt as a "trouble-shooter" and "factory representative" of the West German company.

III. Personal Jurisdiction

A.

Mr. Degenhardt seeks dismissal of the entire complaint as it relates to him for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). He maintains that his contact with the State of Indiana does not meet the constitutional minimum to warrant in personam jurisdiction. Mr. Degenhardt asserts that except for his visits to attempt to resolve the controversy that led to this suit and several other unrelated visits, he had no real contact with the State of Indiana, and those contacts do not warrant the exercise of jurisdiction. Mr. Degenhardt also argues that he was not "doing business" in the State of Indiana as defined under Indiana Trial Rule 4.4(A)(1), and that he does not "regularly solicit business or engage in any other persistent course of conduct" within Indiana under Indiana Trial Rule 4.4(A)(3), so that the Indiana "long-arm statute" cannot reach him. Mr. Degenhardt further asserts that he has not purposefully availed himself of the privilege of doing business in Indiana, so that he would not reasonably expect to answer to suit here. Finally, Mr. Degenhardt asserts that the exercise of jurisdiction would be unreasonable in this action because he has had so little contact with Indiana.

Mac's Eggs claims to have shown significant contacts between Mr. Degenhardt and Indiana: Mr. Degenhardt conducted Meller Batterien's business by appearing at conventions, servicing accounts, and travelling to several Indiana farms to resolve problems. Mac's Eggs argues that the purposefulness of Mr. Degenhardt's contacts is evidenced by his active role in the sale and maintenance of the Meller equipment at Mac's Eggs and two other Indiana egg farms. Mr. Degenhardt should find it is neither unfair nor unreasonable to be "haled into court", Mac's Eggs argues, in the nation's second...