Plumb v. Cottle

• Decision Date: 24 June 1980
• Docket Number: Civ. A. No. 79-302.
• Parties: Donnan Sharp PLUMB, Plaintiff, v. Oren J. COTTLE, Individually and t/a Modern Lightning Protection Company, and Modern Lightning Protection Company and Capital Lightning Protection Company, Inc., Defendants.
• Court: U.S. District Court — District of Delaware

492 F. Supp. 1330

Donnan Sharp PLUMB, Plaintiff, v. Oren J. COTTLE, Individually and t/a Modern Lightning Protection Company, and Modern Lightning Protection Company and Capital Lightning Protection Company, Inc., Defendants.

Civ. A. No. 79-302.

United States District Court, D. Delaware.

June 24, 1980.

COPYRIGHT MATERIAL OMITTED

Alfred M. Isaacs, of Flanzer & Isaacs, Wilmington, Del., for plaintiff; Ronald B. Hamilton, of Cozen, Begier & O'Connor, Philadelphia, Pa., of counsel.

B. Wilson Redfearn, Colin M. Shalk, of Tybout, Redfearn, Casarino & Pell, Wilmington, Del., for defendants.

OPINION

STEEL, Senior District Judge:

Plaintiff Donnan Sharp Plumb brought this suit alleging that her property was damaged by fire as a result of a defect and malfunction in a lightning protection system sold, manufactured, distributed, and installed by the defendants. The defendants have moved to dismiss the suit for lack of personal jurisdiction and for insufficiency of service of process, and on the additional ground that the statute of limitations bars the action.

The complaint and affidavits reveal the following: plaintiff Plumb is a resident of Maryland. Defendant Oren J. Cottle, sued individually and trading as Modern Lightning Protection Company, is a resident of North Carolina. Defendant Modern Lightning Protection Company, a proprietorship owned solely be Cottle, is in the business of selling and installing lightning protection equipment. Defendant Capital Lightning Protection Company, Inc., a North Carolina corporation of which Cottle is the president, manufactures lightning protection systems. Subject matter jurisdiction is based on diversity of citizenship.

On March 7, 1972, Cottle and Modern sold to Plumb at her Maryland residence the lightning protection system at issue in this litigation. The system was installed on Plumb's house and barn in Maryland on or about the same date. The installation was done by two employees of Modern, both of whom were residents of North Carolina. The fire that caused the damage to this Maryland property occurred on or about July 6, 1977.

Plumb purported to serve process on the defendants via the Delaware long arm statute, 10 Del. C. § 3104 (Michie Supp. 1978). This statute provides in pertinent part:

(a) The term "person" in this section includes any natural person, association, partnership or corporation.

(b) The following acts constitute legal presence within the state. Any person who commits any of the acts hereinafter enumerated thereby submits himself to the jurisdiction of the Delaware courts and is deemed thereby to have appointed and constituted the Secretary of State of this State his agent for the acceptance of legal process in any civil action against such nonresident person arising from the following enumerated acts. The acceptance shall be an acknowledgement of the agreement of such nonresident that any process when so served shall have the same legal force and validity as if served upon such nonresident personally within the State, and that such appointment of the Secretary of State shall be irrevocable and binding upon his personal representative.

(c) As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nonresident, or his personal representative, who in person or through an agent:

(1) Transacts any business or performs any character of work or service in the State;

(2) Contracts to supply services or things in this State;

(3) Causes tortious injury in the State by an act or omission in this State;

(4) Causes tortious injury in the State or outside of the State by an action or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State;

(5) Has an interest in, uses or possesses real property in the State; or

(6) Contracts to insure or act as surety for, or on, any person, property, risk, contract, obligation or agreement located, executed or to be performed within the State at the time the contract is made, unless the parties otherwise provide in writing.

The defendants contend that the long arm statute is inapplicable to them. Therefore, they argue, Plumb may not use the statute to serve them with process and thus to acquire personal jurisdiction over them.

The basic question is whether these defendants, under the facts of the case as presented in the record, come within the terms of the statute itself. The record makes clear that section 3104(c)(1)-(3), (5)-(6) would not apply, because the cause of action arose from none of the acts enumerated in those subsections. The only subsection possibly applicable is (c)(4), under which a person may be subjected to the jurisdiction of the Delaware courts if he

causes tortious injury in the State or outside of the State by an act or omission outside the State if he regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State.

Capital has averred in an affidavit that it sells no lightning protection systems in Delaware and ships no such systems to Delaware; that it maintains no branch or subsidiary office in Delaware; and that it is not licensed to do business in Delaware. Doc. No. 13. The Court accepts as true these sworn averments. See Gibbs v. Buck, 307 U.S. 66, 71-72, 59 S.Ct. 725, 729, 83 L.Ed. 1111 (1939) (mode of determining an issue of jurisdiction is left to the discretion of the trial court). The record therefore shows that Capital does not come within the terms of the statute. Consequently, as to it the motion to dismiss for lack of personal jurisdiction must be granted.

On the other hand, Modern currently holds, and has held since 1978, a license to do business in Delaware. In 1978 it derived approximately $36,000, or 3% of its income, and in 1979 about $21,000, or 2% of its income, from sales in Delaware. This amount of revenue is substantial. Because Cottle and Modern both do business in and derive substantial revenue from Delaware, they come within the terms of section 3104(c)(4). Personal jurisdiction was obtained by a valid service of process.

Cottle and Modern next argue that section 3104 may not be applied retroactively to causes of action that accrued prior to July 11, 1978, the effective date of its current version.¹ That date was after both the 1972 sale and installation and the 1977 fire.²

The defendants' contention is at variance with Harmon v. Eudaily, 407 A.2d 232, 233-35 (Del.Super.Ct.1979), appeal docketed, No. 264, 1979 (Del. Sept. 26, 1979), which held that the 1978 amendment to section 3104 was retroactive. In that case Judge O'Hara explained that the most significant barrier to retroactive application of the amended section would be unfairness that resulted from a person's reliance on prior law. The defendants have made no showing that in dealing with Plumb they acted in reliance on the provisions of section 3104 as it existed prior to the 1978 amendment. The defendants argue that retroactive application of section 3104 would affect their substantive rights by providing Plumb with a new remedy. The amendment, however, did not affect any substantive rights that Plumb might have had against the defendants, but merely provides Plumb with a Delaware forum in which to enforce whatever rights she has. See McGee v. International Life Ins. Co., 355 U.S. 220, 224, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957). In addition, Rule 4(e) of the Federal Rules of Civil Procedure provides for service of process pursuant to the state long arm statute. Service of process rules are procedural and do not affect substantive rights. The defendants make much of language in Harmon to the effect that the alleged tortfeasor in that case was a resident of Delaware at the time of the act complained of, and therefore could not expect to escape process by subsequently moving out of state. This is an insufficient basis on which to distinguish Harmon's holding.

The defendants also contend that to apply section 3104 to them would violate due process, in that they have insufficient contacts with Delaware for a court sitting in the state to exercise jurisdiction over them. They point out, correctly, that for a person to be subject to in personam jurisdiction, "he must have certain minimum contacts with the forum state such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Those conditions are satisfied if the contacts make it reasonable to require a nonresident to defend the particular suit brought there. Id. at 317, 66 S.Ct. at 159.

The minimum contacts inquiry consists of more than a merely mechanical or quantitative counting of contacts. Also to be considered are the quality and nature of the activity carried on in the forum state. Id. at 319, 66 S.Ct. at 160. A state may through a long arm statute express an interest in asserting jurisdiction over a particular type of case. Such an explicit expression of interest serves to enhance the constitutional sufficiency of contacts that might otherwise be insufficient to support personal jurisdiction. See Shaffer v. Heitner, 433 U.S. 186, 214-16, 97 S.Ct. 2569, 2584-86, 53 L.Ed.2d 683 (1977); Hanson v. Denckla, 357 U.S. 235, 252, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958); Note, Measuring the Long Arm After Shaffer v. Heitner, 53 N.Y.U.L.Rev. 126, 134-35 (1978).

Viewed in this light, the contacts of Modern and Cottle with Delaware are sufficient for this Court to exercise personal jurisdiction over them. They hold a license to do business in Delaware, and do tens of thousands of dollars of business here per year. The regular and systematic conduct of business...