Meineke Discount Muffler Shops, Inc. v. Feldman

• Decision Date: 07 December 1979
• Docket Number: Civ. A. No. H-79-860.
• Citation: 480 F. Supp. 1307
• Parties: MEINEKE DISCOUNT MUFFLER SHOPS, INC., Plaintiff, v. Joseph FELDMAN, Esther Feldman, Nathan Shanak and Robert Benjamin, Defendants.
• Court: U.S. District Court — Southern District of Texas

480 F. Supp. 1307

MEINEKE DISCOUNT MUFFLER SHOPS, INC., Plaintiff, v. Joseph FELDMAN, Esther Feldman, Nathan Shanak and Robert Benjamin, Defendants.

Civ. A. No. H-79-860.

United States District Court, S. D. Texas, Houston Division.

December 7, 1979.

COPYRIGHT MATERIAL OMITTED

Butler, Binion, Rice, Cook & Knapp, Houston, Tex. (David M. Ostfeld), Houston, Tex., for plaintiff.

Barry Allan Brown, Houston, Tex., and H. Paul Schiller, New York City, for defendants.

MEMORANDUM AND ORDER

STERLING, District Judge.

Presently pending before the Court are the following motions: to quash service, to dismiss for lack of in personam jurisdiction, or, alternatively, to transfer this case to the Eastern District of New York made by all of the Defendants; Plaintiff's motion for entry of a default judgment against Joseph and Esther Feldman, Plaintiff's motion for a preliminary injunction, Plaintiff's motion for leave to file a second amended complaint; and a motion for a protective order joined in by all of the Defendants.

Meineke, a Texas corporation in the business of franchising discount muffler shops, brought this lawsuit against Mr. Feldman, one of its franchisees in New York, alleging that he breached his license agreement with Meineke. Meineke sued Mrs. Feldman, Nathan Shanak, and Robert Benjamin for allegedly inducing Joseph to breach the license agreement. The gravamen of the complaint is that Joseph breached the non-competition clause and the prohibition against divulgement of trade secrets in the course of aiding Esther in the operation of her rival budget muffler store. Plaintiff further complains that Joseph assigned his franchise to a group consisting of himself, Shanak, and Benjamin in violation of the license agreement and has also divulged trade secrets in the course of that operation.

In Mr. Feldman's motion to quash service, dismiss for lack of in personam jurisdiction, or, to transfer to the Eastern District of New York, he baldly asserts, without supporting affidavit, that he has not transacted business in Texas, and, that for the convenience of the parties and in the interest of justice this action should be transferred. Defendant Joseph Feldman's less than spirited defense of his claim that this Court does not have personal jurisdiction over him is understandable. In paragraph 25 of the license agreement, Defendant Feldman consented to jurisdiction and venue in any court of general jurisdiction in Harris County, Texas. Although parties cannot confer subject matter jurisdiction on a court, it is well settled that parties may agree in advance to submit to the jurisdiction of a certain court. National Equipment Rental, Ltd. v. Szukhent, 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964), and Aamco Automatic Transmissions, Inc. v. Hagenbarth, 296 F.Supp. 1142 (E.D.Pa. 1968). Aside from the contractual consent to jurisdiction in Harris County courts, this Court is satisfied that an analysis of Joseph Feldman's contacts with the forum state indicates that the traditional tests of in personam jurisdiction are satisfied and that Mr. Feldman is amenable to suit here.

This is a diversity case and the Defendants were served in accordance with the Texas long-arm statute, Tex.Rev.Civ. Stat.Ann. art. 2031b. In order for this Court to assert personal jurisdiction over the non-resident Defendants, Texas law must confer jurisdiction over the persons of the Defendants, and if it does, the exercise of jurisdiction under state law must comport with the basic due process requirements of the United States Constitution. Product Promotions, Inc. v. Cousteau, 495 F.2d 483 (5th Cir. 1974). The Texas longarm statute attempts to reach all non-residents doing business in Texas. Doing business is defined as "entering into a contract by mail or otherwise with a resident of Texas to be performed in whole or in part by either party in this State, or the committing of any tort in whole or in part in this State." The uncontradicted affidavit of Al Hirsch, an officer of Meineke, establishes that Joseph Feldman was in Harris County to discuss the license agreement with Plaintiff's representatives, to sign the license agreement and to receive training as required by the franchise agreement. Under these circumstances, Defendant Joseph Feldman was within the literal grasp of the long-arm statute, thus satisfying the first part of the in personam jurisdiction inquiry set out in Product Promotions, supra. The remaining inquiry concerns whether the Defendants have such minimum contacts with the forum that the maintenance of the lawsuit here does not offend traditional notions of fair play and substantial justice. International Shoe Company v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). An oft-accepted restatement of the minimal contacts test is whether the Defendant has purposefully availed himself of the benefits and protection of the forum state's laws. Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958) and U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760 (Tex.1977), cert. denied, 434 U.S. 1063, 98 S.Ct. 1235, 55 L.Ed.2d 763 (1978). Defendant Joseph Feldman has engaged in such purposeful activity in Texas by negotiating, consummating, and performing in part the license agreement in Texas. This Court concludes that it would be no affront to our traditional jurisprudential notions of due process to require Mr. Feldman to defend this lawsuit in Texas.

Defendant Joseph Feldman has also moved to transfer this lawsuit to the Eastern District of New York pursuant to 28 U.S.C. § 1404(a). As this Court earlier noted Joseph Feldman consented to venue in Harris County, Texas, when he signed the license agreement. In Plum Tree, Inc. v. Stockment, 488 F.2d 754 (3rd Cir. 1973), the Court held that where the venue agreed upon in a forum selection clause is proper and the Defendant is sued in that district, the Defendant is deemed to have waived his right to move for a § 1404(a) transfer on the ground of inconvenience to him. He may, however, move for transfer on the ground of inconvenience to the witnesses or in the interest of justice. The Court notes at the outset that venue is proper in this district under 28 U.S.C. § 1391(a). It is well settled that the movant has the burden of showing that a transfer to another district is warranted. Struthers Scientific & International Corporation v. General Foods Corporation, 290 F.Supp. 122 (S.D.Tex.1968). In order to shoulder the burden of showing that witness inconvenience merits transfer of a lawsuit, the movant "must provide precise information, in affidavit form, about the witnesses he intends to call and the anticipated areas of their testimony . . ." Car-Freshner Corporation v. Auto-Aid Manufacturing Corporation, 438 F.Supp. 82, 85 (N.D.N.Y.1977). Defendant Joseph Feldman's bald statement that "for the convenience of the parties and witnesses and in the interests of justice, this action should be transferred . . ." does not satisfy the heavy burden placed on a party seeking to transfer a suit to a different district. Therefore, Defendant Joseph Feldman's motion to transfer will be denied.

Defendants Shanak and Benjamin have also contested service of process, personal jurisdiction, and alternatively, move to transfer this lawsuit to the Eastern District of New York. In Shanak and Benjamin's motion to quash service and to dismiss for lack of in personam jurisdiction, they assert, without accompanying affidavits that they have not transacted business in Texas. In Plaintiff's response to their motion to quash and to dismiss, Plaintiff argues not that Shanak and Benjamin were doing business in Texas but instead that these Defendants also consented to jurisdiction in Texas by virtue of the same contractual consent clause discussed above. Plaintiff's position in this regard is not consistent. In paragraph 5 of its first amended complaint Plaintiff alleges that "the license agreement was assigned by Joseph Feldman and Odded Adri to Defendants, Joseph Feldman, Nathan Shanak and Robert Benjamin." Plaintiff has attached a copy of the assignment to its complaint. In paragraph 6 of the first amended complaint, Plaintiff further alleges that the assignment granted Defendants Mr. Feldman, Shanak and Benjamin the right to operate the Meineke Discount Center subject to the terms and conditions set out in the license agreement. In paragraph 18 of the first amended complaint, Plaintiff alleges that Mr. Feldman attempted to assign his rights and obligations under the license agreement to Shanak and Benjamin without complying with the conditions placed on assignment in the license agreement. The license agreement required that Meineke approve the proposed transfer, that the transferee execute a license agreement, that the transferee complete the Meineke training course, that the original licensee not be in default at the time of the transfer, and that the original licensee also execute a release of all claims and pay a transfer fee of $500. In paragraph 20 of the amended complaint, Plaintiff alleges that Defendants Joseph Feldman, Shanak, and Benjamin, "did not comply in any respect with the requirements of Paragraph 13 of the license agreement prior to the purported assignment by Defendant, Joseph Feldman, of his rights and obligations under the license agreement to Defendants, Nathan Shanak and Robert Benjamin. Any such assignment by Defendant, Joseph Feldman, without complying with the provisions of Paragraph 13 of the license agreement is null and void." Part of the relief requested by Plaintiff in its complaint is a declaration by this Court that the purported assignment by Mr. Feldman to Shanak and Benjamin is "void and of no force and effect." Plaintiff is apparently taking the position that the attempted assignment is void for all purposes except that Defendants Shanak and Benjamin are obligated by the consent to jurisdiction in Texas clause contained in the license...