Marine Midland Bank v. Keplinger & Associates, 79 Civ. 4618 (KTD).
Decision Date | 25 March 1980 |
Docket Number | No. 79 Civ. 4618 (KTD).,79 Civ. 4618 (KTD). |
Citation | 488 F. Supp. 699 |
Parties | MARINE MIDLAND BANK, Plaintiff, v. KEPLINGER & ASSOCIATES, INC. and J.W. Miller & Associates, Inc., Defendants. |
Court | U.S. District Court — Southern District of New York |
Sullivan & Cromwell, New York City, for plaintiff; John Dickey, D. Stuart Meiklejohn, New York City, of counsel.
Gottesman, Wolgel, Smith & Secunda, New York City, for defendant Keplinger & Associates, Inc.; Harold H. Wolgel, Bart J. Klein, New York City, of counsel.
Olshan, Grundman & Frome, New York City, for defendant J.W. Miller & Associates, Inc.; Richard H. Abelson, New York City, of counsel.
Plaintiff, Marine Midland Bank hereinafter referred to as "MMB", commenced this action against the defendants, Keplinger & Associates, Inc. hereinafter referred to as "Keplinger", and J.W. Miller & Associates, Inc. hereinafter referred to as "Miller", charging them with negligence, breach of contract and material misrepresentations of fact. The charges emanate from MMB's financing of a Utah coal mining project which was allegedly based upon certain information and reports submitted to it by Miller and Keplinger concerning the quantity and quality of recoverable coal.
In the summer of 1977, a group of investors, later to form the partnership of Atlas-Dirty Devil Mining, sought financial backing from MMB for the development of a Utah coal mine to be owned and operated by the partnership. Before advancing any monies, however, MMB wanted assurance that the potential coal recoveries were sufficient in quantity and quality to safeguard its investment.
To this end, MMB secured the geological report on the Atlas-Dirty Devil Mining Project hereinafter the "ADDM project", which was prepared by J.W. Miller & Associates, Inc. hereinafter the "Miller report". The Miller report recited, inter alia, that the development of the Utah mine could yield a recovery of nearly 27 million tons of clean coal. In order to interpret and verify the geological data upon which this conclusion was based, MMB sought the services of an expert coal consultant.
After a telephonic communication between one of MMB's vice presidents and H.F. Keplinger, President of Keplinger & Associates, Inc., it was agreed that Keplinger's firm would review all the geological data of the ADDM project and report to MMB on the potential coal recoveries. The report hereinafter the "Keplinger's report", issued in August, 1977, contained the following:
Thereafter, in October and November, 1977, MMB entered into loan agreements with the Atlas-Dirty Devil partnership. These agreements called for the disbursement of funds by MMB to the partnership or directly to its creditors for costs and expenses arising out of the ADDM project.
During the following year, MMB continued to finance the ADDM project to the tune of $8 million. And, from time to time during this period, Keplinger would report to MMB in New York on the status of the project.
As it developed, however, by the fall of 1978 the ADDM project began to go sour. It became apparent that the recoverable coal from the project was simply not the quality necessary to make the mine a profitable enterprise. MMB confirmed this grim conclusion through Keplinger's later reports. The Atlas-Dirty Devil partnership has since filed a petition under Chapter XI of the Bankruptcy Act.
Plaintiff commenced the instant action to recover the more than $8 million it advanced to develop the Utah mine. MMB reasons that all advances to the ADDM project were based upon the apparently erroneous premise that the information contained in the Miller and Keplinger reports was accurate. MMB concludes that since it reasonably relied upon the proffered geological and interpretive expertise of Miller and Keplinger in financing the ADDM project, both Miller and Keplinger should be made to respond in damages for all losses incurred.
Keplinger has now moved to dismiss the action for want of personal jurisdiction or, in the alternative, to have the entire action transferred for trial to the Southern District of Texas or to grant Keplinger a severance and try all claims asserted against it in Texas while the instant action proceeds against Miller in New York.
Plaintiff opposes the instant motions on the ground that New York has personal jurisdiction over Keplinger by virtue of its long-arm statute, N.Y.Civ.Prac.Law § 302 (McKinney 1980).
More particularly, plaintiff argues that there are two separate provisions of the long-arm statute which render Keplinger subject to personal jurisdiction in New York. First, plaintiff urges that Keplinger entered into a contract to supply services in New York. § 302(a)1. Plaintiff also argues that Keplinger committed a tortious act outside of New York which caused injury in New York and which was reasonably foreseeable. § 302(a)3.
Plaintiff also asserts that New York is the appropriate forum and opposes Keplinger's request for a transfer of the entire action or a partial severance.
For the reasons stated below, each of Keplinger's motions must be denied.
The defendant Miller has taken no position with respect to Keplinger's jurisdictional motions but does oppose the transfer of the action or the severance of its codefendant.
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