Merkel Assoc., Inc. v. Bellofram Corp.

• Citation: 437 F. Supp. 612
• Decision Date: 15 September 1977
• Docket Number: Civ. No. 74-373.
• Parties: MERKEL ASSOCIATES, INC. and Robert H. Merkel, Individually, Plaintiffs, v. BELLOFRAM CORPORATION, John F. Taplin, Donald W. Comstock and Bellofram Patents, Inc., Defendants.
• Court: U.S. District Court — Western District of New York

437 F. Supp. 612

MERKEL ASSOCIATES, INC. and Robert H. Merkel, Individually, Plaintiffs, v. BELLOFRAM CORPORATION, John F. Taplin, Donald W. Comstock and Bellofram Patents, Inc., Defendants.

Civ. No. 74-373.

United States District Court, W. D. New York.

September 15, 1977.

COPYRIGHT MATERIAL OMITTED

Grover R. James, Jr., Hodgson, Russ, Andrews, Woods & Goodyear, Buffalo, N.Y., for plaintiffs.

James W. Smyton, Ogden R. Brown, Brown, Kelly, Turner, Hassett & Leach, Buffalo, N.Y., for defendants.

MEMORANDUM and ORDER

ELFVIN, District Judge.

Plaintiffs herein complain that defendants breached and caused to be breached certain duties imposed upon defendant Bellofram Corporation in and by a certain written contract with plaintiffs and upon said defendant and defendant John F. Taplin in and by a certain unwritten agreement with plaintiffs and that defendants conspired tortiously to harm plaintiffs in their rights under said contracts and otherwise. Plaintiffs are residents and citizens of New York State and this judicial district and all defendants are residents in and citizens of the State of Massachusetts or, at least, not residents in or citizens of New York State. This court's jurisdiction of the subject matter is bottomed on such diversity and an appropriate amount in controversy.

Defendants have questioned this Court's jurisdiction over the persons of the defendants. It affirmatively appears that each of the defendants was served outside of the State of New York. Service was effected upon the two corporations and defendant Comstock by serving "Mary Chilani Office Mngr" and upon defendant Taplin by serving his wife. All such services were made in Massachusetts. No complaint has been made to these particular services other than the basic assertion that none of the defendants was doing business or otherwise present in New York State within the purview of section 302 of New York's Civil Practice Law and Rules ("CPLR § 302") or any other provision of law. Additionally, it is set forth that defendant Bellofram Patents, Inc. ("Patents") was not present or doing business in Massachusetts.

Service sufficient to the acquisition of jurisdiction over the person of a defendant is controlled by rule 4(d) of the Federal Rules of Civil Procedure which provides in pertinent part as follows:

"* * * Service shall be made as follows:

"(1) Upon an individual by leaving copies of the summons and of the complaint at his dwelling house or usual place of abode with some person of suitable age and discretion then residing therein * *.

* * * * * *

"(3) Upon a * * * foreign corporation * * * by delivering a copy of the summons and of the complaint to * * a managing * * * agent * * *.

* * * * * * "(7) Upon a defendant of any class referred to in (1) or (3) of this subdivision of this rule, it is also sufficient if the summons and complaint are served * * * in the manner prescribed by the law of the state in which the district court is held for the service of summons or other like process upon any such defendant in an action brought in the courts of general jurisdiction of that state."

Not complaining of the "manner" of service of process, defendants do assert that there can be no personal jurisdiction over any of them by the courts of New York State and, consequently, by a federal court sitting in New York State where the subject matter jurisdiction is premised on diversity of citizenship. Plaintiffs point to CPLR § 302(a) as entitling New York courts and this Court to exercise personal jurisdiction over each defendant. Thereunder this Court, sitting in New York State in this diversity action, "may exercise personal jurisdiction over any nondomiciliary * * * who in person or through an agent:

"1. transacts any business within the state; or

"2. commits a tortious act within the state * * *; or

"3. commits a tortious act without the state causing injury to person or property within the state * * * if he

"(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in the state, or

(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce * * *."

Before considering the nuances of the above and the adequacies or inadequacies of the complaint's allegations as augmented by the many affidavits which have been filed, the question of jurisdiction in this Court of the person of defendant Bellofram Corporation is to be resolved. Defendants' motion asserted that "this Court lacks jurisdiction over any of the defendants and that none of the defendants are sic subject to service of process within the Western District of New York." (My emphasis). Plaintiffs' memorandum in opposition states (p. 1) that "Defendants' counsel has now agreed that jurisdiction is proper over Bellofram Corporation" and only defendants Taplin, Comstock and Bellofram Patents, Inc. are spoken of in defendants' supporting memorandum as moving for dismissal (pp. 1, 17-18). Nor could there be any contrary ruling by me. Defendant Bellofram Corporation was transacting business within the State of New York and in the Western District of New York through its agents — e. g., plaintiff Merkel and defendants Taplin and Comstock. Consequently, the motion to dismiss as to this defendant is hereby denied.

Determination of the motion as to the remaining defendants requires some sorting out of the various causes of action set forth in the complaint. The second cause relates to and seeks damages for allegedly illegal termination by letter dated January 31, 1973 of plaintiffs' representation of defendant Bellofram Corporation for purposes of effecting sales in that portion of the State of New York which lies to the north of and includes the Counties of Delaware, Greene and Columbia. This portion includes the whole of the Western and Northern Districts of New York and part (Greene County and Columbia County) of the Southern District of New York. The said representation was pursuant to a certain Sales Agency Agreement dated October 16, 1967 between plaintiff Robert Merkel and defendant Bellofram Corporation. This agreement was subsequently amended by the parties October 1, 1968 and November 22, 1972. The other three causes of action relate to this contract.

The first cause seeks damages for a breach of the Sales Agency Agreement by Bellofram Corporation in that it disclosed to third parties "proprietary information". The specific portion of the agreement which is alleged to have been breached provides, in part:

"7. The AGENT Merkel and BELLOFRAM Corporation agree that during the term of this AGREEMENT or thereafter they will not disclose to others or make use of except for the purposes of this AGREEMENT any knowledge or information supplied by the other party of a proprietary nature, and each agrees to require his employees to abide by the terms of this paragraph."

The first cause also includes claims against all the defendants that they conspired to convert and did convert to the use and benefit of all the defendants except Comstock "proprietary information" of the plaintiffs. As to Patents it is specifically alleged that Taplin used such information to obtain patents in the name of Patents and that Patents accepted and used said patents.

The fourth cause seeks damages for alleged conspiracy to interfere and for interference by the defendants in plaintiffs' contractual relations with Bellofram Corporation. No specific act by any defendant is alleged.

The third cause seeks damages for an alleged breach of an oral contract first made in 1962 between plaintiff Merkel and defendant Taplin, individually and as Chairman of Bellofram Corporation. It is further alleged that this oral contract was reaffirmed by Taplin as late as September of 1972. Alternatively, the third cause claims that defendants by misrepresentations fraudulently induced plaintiffs to expend time and money to perform the Sales Agency Agreement which plaintiffs would not otherwise have done.

It is within the framework of the above causes of actions and claims that the question of personal jurisdiction is to be determined.

Inasmuch as plaintiffs seek to invoke CPLR § 302 to obtain jurisdiction over the persons of defendants, it is they who must prove sufficiently the existence of facts lending themselves to personal jurisdiction over the defendants. Evans v. Eric, 370 F.Supp. 1123 (S.D.N.Y.1974); Lamarr v. Klein, 35 A.D.2d 248, 315 N.Y.S.2d 695 (1st Dept.1970); United States v. Montreal Trust Company, 358 F.2d 239 (2d Cir.), cert. denied, 384 U.S. 919, 86 S.Ct. 1366, 16 L.Ed.2d 440 (1966); Unicon Management Corp. v. Koppers Company, 250 F.Supp. 850 (S.D.N.Y.1966). If CPLR § 302(a)(1) (the transaction of business section) is involved, plaintiffs must demonstrate that the defendant was engaged in a purposeful activity within the state and that plaintiffs' claim arises from that activity. Longines-Wittnauer Watch Co. v. Barnes and Reinecke, Inc., 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965). If CPLR § 302(a)(2) or § 302(a)(3) is involved, plaintiffs must demonstrate that the defendant committed within or without the state a specific act which plaintiffs claim to be tortious. Evans v. Planned Parenthood Etc., 43 A.D.2d 996, 352 N.Y.S.2d 257 (3d Dept.1974).

Generally, plaintiffs' complaint does not allege with any particularity facts which would support personal jurisdiction and their affidavits do not correct this deficiency. Plaintiffs rely solely on their complaint and affidavits and this Court is limited to the facts therein alleged.

Before reaching the substance of the motion, a comment is necessary. The plaintiffs have frequently used the collective term "defendants" in the complaint, even where the term was inappropriate. For example, in the second cause of action which is for breach of...