Piper Acceptance Corp. v. Slaughter

• Decision Date: 07 January 1985
• Docket Number: No. 84-K-907.,84-K-907.
• Citation: 600 F. Supp. 169
• Parties: PIPER ACCEPTANCE CORPORATION, a Florida corporation, Plaintiff, v. William E. SLAUGHTER, Janice H. Slaughter, Dennis C. Hayzlett and Catharine C. Hayzlett, individuals, Defendants. Dennis C. HAYZLETT and Catharine C. Hayzlett, Third-Party Plaintiffs, v. BELLAS AVIATION, INC. d/b/a Rocky Mountain Piper, Anthony G. Bellas, Gerard A. Bellas, Stella K. Bellas, Daniel J. Bellas, Bangor Punta Corporation and its Subsidiaries, Piper Aircraft Corporation, Rocky Mountain Aircraft, Inc., Rocky Mountain Piper, Inc., a Colorado corporation, Alfred Anderson, Michael Littman and Dan Bellas, Third-Party Defendants.
• Court: U.S. District Court — District of Colorado

600 F. Supp. 169

PIPER ACCEPTANCE CORPORATION, a Florida corporation, Plaintiff, v. William E. SLAUGHTER, Janice H. Slaughter, Dennis C. Hayzlett and Catharine C. Hayzlett, individuals, Defendants.

Dennis C. HAYZLETT and Catharine C. Hayzlett, Third-Party Plaintiffs, v. BELLAS AVIATION, INC. d/b/a Rocky Mountain Piper, Anthony G. Bellas, Gerard A. Bellas, Stella K. Bellas, Daniel J. Bellas, Bangor Punta Corporation and its Subsidiaries, Piper Aircraft Corporation, Rocky Mountain Aircraft, Inc., Rocky Mountain Piper, Inc., a Colorado corporation, Alfred Anderson, Michael Littman and Dan Bellas, Third-Party Defendants.

No. 84-K-907.

United States District Court, D. Colorado.

January 7, 1985.

Brian A. Magoon, John R. Reha, McMartin, Burke, Loser & Fitzgerald, P.C., Englewood, Colo., for plaintiff and defendant Bangor Punta.

Peter R. Bornstein, Berenbaum & Weinshienk, Denver, Colo., for defendants Hayzlett.

Lance Astrella, Denver, Colo., for Rocky Mountain Aircraft.

MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Defendants and third-party plaintiffs Dennis C. and Catharine C. Hayzlett entered into an agreement for the sale and leaseback of an airplane on or about December 23, 1981. In their third-party complaint the Hayzletts allege that this transaction involved the sale of a security by improper and fraudulent means. The airplane was manufactured by Piper Aircraft, a wholly owned subsidiary of Bangor Punta Corporation, and sold by Piper Aircraft's authorized dealer, Bellas Aviation. The transaction was financed by Piper's financing affiliate, Piper Acceptance Corporation. The leaseback provided for Bellas Aviation to have exclusive use of the airplane in operations such as flying lessons and charters to the public. In September 1982, Bellas Aviation transferred its interest in the airplane to Rocky Mountain Aircraft. Thereafter, Rocky Mountain Aircraft took over the operations of Bellas Aviation.

Piper Acceptance filed this suit in May, 1984 seeking recovery for breach of contract. The Hayzletts filed their answer, counterclaim and third-party complaint on June 20, 1984 alleging fraud and securities violations associated with the sale and leaseback of the airplane. The third-party complaint sets forth five separate claims for relief as follows: the first claim alleges various misrepresentations in violation of §§ 10(b), 15(c)(1) and 20(a) of the Securities Exchange Act of 1934 and the regulations promulgated thereunder; the second claim alleges violations of federal securities registration requirements giving rise to claims under §§ 12(1) and 15 of the Securities Act of 1933; the third claim for relief alleges violations of §§ 12(2) and 15 of the Securities Act of 1933; the fourth claim alleges violations of Colorado securities laws, Colo. Rev.Stat. § 11-51-125 (1984 Cum.Supp.); and the fifth claim for relief alleges common law fraud. Before me now are motions to dismiss, for a more definite statement and for summary judgment filed by third-party defendants Bangor Punta Corporation, Rocky Mountain Aircraft, Inc. and Piper Acceptance Corporation.

Personal Jurisdiction

The uncontested affidavits submitted by Bangor Punta indicate that it is a Delaware corporation with its principal place of business in Greenwich, Connecticut. At no time material has Bangor Punta conducted business within the State of Colorado as contemplated by the Colorado long-arm statute, Colo.Rev.Stat. § 13-1-124 (1973). Accordingly, Bangor Punta argues that it does not have sufficient contacts with Colorado to provide for personal jurisdiction in this court. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

This position, however, misconstrues the jurisdictional basis underlying the Hayzlett's federal securities claims. Jurisdiction here is founded on specific statutory provisions authorizing nationwide service of process. Fed.R.Civ.P. 4(f). A claim under federal securities laws "may be brought in the district wherein any act or transaction constituting the violation occured." 15 U.S.C. § 78aa. Service of process is, therefore, not constrained by the limitations of the Colorado long-arm statute or the minimum contacts requirements of International Shoe, but is "co-extensive with the boundaries of the United States." See F.T.C. v. Jim Walter Corp., 651 F.2d 251, 256 (5th Cir.1981). Thus, the fairness requirements embodied in due process are satisfied if the party contesting personal jurisdiction is a resident of the United States, "the sovereign that has created the court." Stafford v. Briggs, 444 U.S. 527, 554, 100 S.Ct. 774, 789, 63 L.Ed.2d 1 (1980) (Stewart, J., dissenting). "Here the sovereign is the United States, and there can be no question but that ... Bangor Punta ... has sufficient contacts with the United States to support the fairness of the exercise of jurisdiction over him by a United States Court." Fitzsimmons v. Barton, 589 F.2d 330, 333 (7th Cir.1979).

Relying upon Oxford First Corp. v. PNC Liquidating Corp., 372 F.Supp. 191 (E.D. Pa.1974) Bangor Punta suggests that an additional standard of fairness should be applied to determine if due process is met through nationwide service of process. This, however, misconstrues the fairness requirement underlying personal jurisdiction. The fairness issues raised in Oxford relate to the appropriateness of litigating a case in a specific forum and not the power of a sovereign to exercise power over a litigant by asserting jurisdiction. The issues of fairness raised in Oxford and by Bangor Punta go to the issue of venue not jurisdiction. See Fitzsimmons, 589 F.2d at 334-35; Clement v. Pehar, 575 F.Supp. 436, 438-39 (N.D.Ga.1983). Bangor Punta does not contest venue in this court pursuant to 28 U.S.C. § 1404(a).

In the alternative, Bangor Punta argues that nationwide service of process pursuant to § 78aa extends only to the Hayzletts' federal securities claims and does not grant jurisdiction over Bangor Punta with regard to the pendent state law claims. See, e.g., Wilensky v. Standard Beryllium Corp., 228 F.Supp. 703, 705-6 (D.Mass.1964). While there is authority for this position, a more reasoned view extends personal jurisdiction concerning the federal claims to related and ancillary state claims. See International Controls Corp. v. Vesco, 593 F.2d 166, 175 n. 5 (2d Cir.), cert. denied, 442 U.S. 941, 99 S.Ct. 2884, 61 L.Ed.2d 311 (1979), Robinson v. Penn Central Co., 484 F.2d 553 (3d Cir. 1973), Emerson v. Falcon Mfg., Inc., 333 F.Supp. 888 (S.D.Tx.1971); C. Wright, Law of Federal Courts § 10 at p. 32 (4th Ed. 1983). Each of the Hayzletts' claims arise out of a common nucleus of operative facts. Moreover, the Hayzletts did not initially invoke the jurisdiction of this court, rather their claims arise in the nature of compulsory counterclaims. They should, therefore, not be prejudiced for initially failing to file suit in state court in Colorado or Delaware. Accordingly, I recognize pendent jurisdiction over all claims asserted under the laws of the State of Colorado.¹ I also exercise ancillary personal jurisdiction over Bangor Punta with regard to the state law claims.

Statutes of Limitations

Third-party defendants argue that the Hayzletts' second and fourth claims for relief are barred by the relevant statutes of limitations. The second claim, asserted under §§ 12(1) and 15 of the Securities of 1933, must be brought within one year of the violation. 15 U.S.C. § 77m. The Hayzletts' counterclaim indicates that the relevant contract for the purchase of the airplane was entered in December, 1981. No other facts concerning the timing of the alleged securities violation are found in the June, 1984, counterclaim. The Hayzletts are under an obligation to plead affirmatively facts indicating compliance with the limitations period. See Hagert v. Glickman, Lurie, Eiger & Co., 520 F.Supp. 1028, 1033 (D.Mn.1981); Kroungold v. Triester, 407 F.Supp. 414, 417-18 (E.D.Pa. 1975). The pleadings indicate only that the violation occurred some two and one-half years before to the assertion of the claim. The second claim is, therefore, time barred.

Third-party defendants also argue that the Hayzletts' state securities claims, asserted in the fourth claim for relief, are time barred. Colorado statutes clearly provide that allegations of improper registration have a two year limitation, while allegations of fraud and misrepresentation have a three year limitation. Colo.Rev. Stat. § 11-51-125(8). Accordingly, state law claims alleging improper securities registration are dismissed. The motions to dismiss other state claims as time barred are denied.

Successor Liability

Third-party defendant Rocky Mountain Aircraft was not incorporated until September 29, 1981, almost one year after the occurance of the events underlying the Hayzletts' allegations. The Hayzletts acknowledge that under normal circumstances Rocky Mountain Aircraft could not be liable for actions taken before its corporate existence.

The Hayzletts argue that Rocky Mountain Aircraft's liability derives from its knowing acceptance of the fruits of fraud. See U.S. v. Carbon County Land Co., 46 F.2d 980, 986 (10th Cir.1931). That is, as the successor to Bellas Aviation, Rocky Mountain Aircraft should be held liable for the actions of Bellas Aviation. The general rule, however, provides for non-liability of successor corporations. The risk of loss falls upon the injured party. See Hickman v. Thomas C. Thompson Co., 592 F.Supp. 1282, 1283-84 (D.Colo.1984). The Hayzletts have alleged no facts suggesting that Rocky Mountain Aircraft was not a bona fide purchaser for value of Bellas Aviation's interests. Nor have they alleged any facts giving rise to an exception to the general rule of non-liability of successor corporations. Accordingly, Rocky Mountain Aircraft's motion for summary...