Paul v. International Precious Metals Corp.

• Decision Date: 03 July 1985
• Docket Number: Civ. A. No. J84-0877(B).
• Citation: 613 F. Supp. 174
• Parties: M.P. PAUL, Plaintiff, v. INTERNATIONAL PRECIOUS METALS CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

613 F. Supp. 174

M.P. PAUL, Plaintiff, v. INTERNATIONAL PRECIOUS METALS CORPORATION, Defendant.

Civ. A. No. J84-0877(B).

United States District Court, S.D. Mississippi, Jackson Division.

July 3, 1985.

Larry D. Moffett, Debra M. Robbins, Jackson, Miss., for plaintiff.

Neil P. Olack, Watkins, Ludlam & Stennis, Jackson, Miss., Craig Edward Stein, Arky, Freed, Stearns, Watson, Greer & Weaver, Miami, Fla., for defendant.

MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter is before the Court on the Motion to Dismiss for lack of in personam jurisdiction and for insufficiency of service of process pursuant to F.R.Civ.P. 12(b)(2) and 12(b)(4), respectively, to dismiss or transfer venue for improper venue pursuant to 28 U.S.C. § 1406(a), to transfer venue pursuant to 28 U.S.C. § 1404(a), and to dismiss counts V and VI for failure to state a claim upon which relief can be granted pursuant to F.R.Civ.P. (12)(b)(6).

The Defendant, International Precious Metals Corporation (IPMC) is a Michigan corporation with its sole place of business in Fort Lauderdale, Florida. The Defendant is engaged in the business of offering to enter into and entering into transactions for the delivery of commodities under standardized "leverage contracts." In May 1983, the Defendant placed an advertisement in the Wall Street Journal which was circulated and read by the Plaintiff in the State of Mississippi. The advertisement gave a national toll-free number and urged prospective customers to contact the Defendant for the purpose of entering into leveraged contracts for the purchase of precious metals. On or about May 11, 1983, the Plaintiff made a telephone call from his residence in Jackson, Mississippi, to the Defendant's place of business in Fort Lauderdale, Florida. As a result of this conversation and various alleged misrepresentations made by the Defendant's agents, the Plaintiff agreed to purchase 2,000 ounces of silver on that date. The Plaintiff mailed the Defendant a check in the amount of $6,368.97, drawn on the Plaintiff's Jackson, Mississippi bank on May 18, 1983. As a result of falling prices in the silver market, the Plaintiff was requested to meet a "margin call" of $2,600.00 shortly thereafter. The Plaintiff sent a check in the amount of $2,535.52 to IPMC on or about June 2, 1983, drawn on the Plaintiff's bank account in Jackson, Mississippi to meet this "margin call." Shortly thereafter the Plaintiff allegedly told the Defendant's agents that he wished to liquidate his position at a break-even point at the earliest opportunity. IPMC informed the Plaintiff that he would have to fill out a standard customer account agreement and summary risk disclosure statement in order to close out his account and sent the agreement to the Plaintiff. The Plaintiff signed and returned the Customer Account Agreement on June 14, 1983. In the fall and winter of 1983-84, the Plaintiff was required to meet several margin calls by checks drawn on his account maintained in Jackson, Mississippi. The Plaintiff's account was finally liquidated by IPMC on or about January 9, 1984.

The Plaintiff filed a six-count complaint in the Circuit Court for the First Judicial District of Hinds County, Mississippi, alleging fraud, negligent misrepresentation, breach of fiduciary duties and violations of the federal commodities laws. Service of process was effected upon the Defendant pursuant to Mississippi's "long arm statute," Miss.Code Ann. § 13-3-57 (Supp. 1984). The Defendant removed this action to this Court in a timely manner.

The Defendant's Motions will be discussed separately hereinafter.

1. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND INSUFFICIENCY OF SERVICE OF PROCESS

IPMC contends that it is not doing business in the State of Mississippi and that it has not committed a tort or entered into a contract to be performed in whole or in part in Mississippi so as to fall within the reach of Mississippi's long arm statute. IPMC attaches the affidavit of Harvey Kochen, its assistant Vice-President/Director of Compliance, in support of its Motion. The Kochen affidavit avers that IPMC has never employed sales agents or representatives in the State of Mississippi, has no bank accounts or tangible assets located in the State of Mississippi, and that all business transactions conducted on behalf of IPMC's customers are transacted through IPMC's sole office in Fort Lauderdale, Florida.

The Plaintiff correctly notes that physical presence in the state is not a prerequisite to the assertion of jurisdiction over the Defendant. The Plaintiff alleges that his economic loss in the State of Mississippi causes the tort to have occurred in Mississippi and urges this Court to hold that the Wall Street Journal advertisement in the State of Mississippi, the telephone calls to and from Mississippi and the fact that the Plaintiff's checks were drawn on his Mississippi account suffice for the exercise of in personam jurisdiction over the Florida Defendant. The Plaintiff's arguments and authorities are not persuasive.

In Collins v. Truck Equipment Sales, Inc., 231 So.2d 187 (Miss.1970) a non-resident corporation's sending representatives into a state to solicit sales did not support jurisdiction under Mississippi's long-arm statute. Where there is no personal instate solicitation at all, as in the instant case, the rationale for assertion of in personam jurisdiction is even less. Likewise, telephone calls to and from the plaintiff's forum state have been held insufficient to extend long-arm jurisdiction over non-resident defendants. See, e.g., Reed-Joseph Co. v. DeCoster, 461 F.Supp. 748, 750 (N.D. Miss.1978); R. Clinton Construction Co. v. Bryant & Reaves, Inc., 442 F.Supp. 838 (N.D.Miss.1977). Plaintiff's reliance upon Brown v. Flowers Indus., Inc., 688 F.2d 328 (5th Cir.1982) for the proposition that a single telephone call made by a non-resident defendant may be sufficient for the exercise of long-arm jurisdiction under § 13-3-57 (Supp.1984), is misplaced. Brown dealt with a defamatory telephone call. The torts of libel and defamation are unique torts which courts have consistently held to have occurred simultaneously in the locales of transmission and receipt. See, e.g., Keeton v. Hustler Magazine, 466 U.S. 770, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984).¹ With regard to the Plaintiff's contention that checks drawn on his Mississippi bank account suffice to create in personam jurisdiction, the United States Supreme Court has recently held:

Common sense and every day experience suggest that, absent unusual circumstances, the bank on which a check is drawn is generally of little consequence to the payee and is a matter left to the discretion of the drawer. Such unilateral activity of another party or a third person is not an appropriate consideration when determing whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction.

Helicopteros Nacionales de Columbia v. Hall, 466 U.S. 408, ___, 104 S.Ct. 1868, 1873, 80 L.Ed.2d 404, 412 (1984) (dismissal for lack of in personam jurisdiction).²

2. TRANSFER OF VENUE

IPMC argues that since the Plaintiff's claim is predicated in part upon the Commodity Exchange Act, venue is controlled by 28 U.S.C. § 1391(b). Section 1391(b) provides:

A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose, except as otherwise provided by law.

Similar actions invoking the Commodity Exchange Act have been held to have risen where the misrepresentations were made, not where they were received. See, e.g., Leech v. First Commodity Corporation of Boston, 553 F.Supp. 688 (W.D.Pa.1982); Commodities Futures Trading Commission v. First National Monetary Corp., 565 F.Supp. 30, 32 n. 4 (N.D.Ill.1983).³

But for the Defendant's removal of this action pursuant to 28 U.S.C. § 1441(a), this Court might be inclined to agree that venue is improper in the Southern District of Mississippi. Venue in actions removed pursuant to § 1441(a) however are governed by the venue provisions of that section and not by § 1391.

But even on the question of venue, § 1391 has no application to this case because this is a removed action. The venue of removed actions is governed by 28 U.S.C. (Supp. V) § 1441(a), and under that section venue was properly laid in the Southern District of Florida.... Section 1391(a) limits the district in which an action may be "brought." Section 1391(c) similarly limits the district in which a corporation may be "sued." This action was not "brought" in the district court, nor was respondent "sued" in there; the action was brought in a state court and removed to the District Court. Section 1441(a) expressly provides that the proper venue of a removed action is "the district court of the United States for the district and division embracing the place where such action is pending." ...

Therefore, the question whether respondent was "doing business" in Florida within the meaning of § 1391(c) is irrelevant, and the discussion of that question is beside the point.

Polizzi v. Cowles Magazines, 345 U.S. 663, 665-66, 73 S.Ct. 900, 902-903, 97 L.Ed. 1331 (1953). As noted in Wright & Miller, "The general venue statutes, Section 1391 through Section 1393, do not apply to cases that have been initiated in a state court and removed to a federal court. It therefore is immaterial that the federal court to which the action is removed would not have been in a district of proper venue if the action had been brought there originally." Wright, Miller & Cooper, Federal Practice & Procedure Jurisdiction 2d § 3726, at 436-37 (1985).

Since the Defendant's removal of this action to this Court makes venue proper in this district, the Court will now consider the Motion to Transfer in light of 28 U.S.C. § 1404(a), which allows for transfer from a proper venue. 28 U.S.C. § 1404(a...