Scullin Steel Co. v. NAT. RY. UTILIZATION CORP., 80-844C(3).

• Decision Date: 27 July 1981
• Docket Number: No. 80-844C(3).,80-844C(3).
• Citation: 520 F. Supp. 383
• Parties: SCULLIN STEEL COMPANY, Plaintiff, v. NATIONAL RAILWAY UTILIZATION CORP., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

520 F. Supp. 383

SCULLIN STEEL COMPANY, Plaintiff, v. NATIONAL RAILWAY UTILIZATION CORP., Defendant.

No. 80-844C(3).

United States District Court, E. D. Missouri, E. D.

March 31, 1981.

Amended April 8, 1981.

On Motion To Alter or Amend July 27, 1981.

Jim J. Shoemake and John W. O'Neil, Jr., St. Louis, Mo., for plaintiff.

Veryl L. Riddle and William E. McCurdy, Jr., St. Louis, Mo., for defendant.

MEMORANDUM

FILIPPINE, District Judge.

This matter is before the Court on defendant's motion to quash service of process and to dismiss for lack of personal jurisdiction and for failure to state a claim, or in the alternative to transfer this action to the Eastern District of Pennsylvania. Both parties have submitted affidavits in support of their respective positions with respect to the motion. Taking all of the allegations of the complaint as true, except as those allegations are controverted by defendant's affidavits, and considering also all affidavits on file, the Court finds that the plaintiff has not made a sufficient prima facie showing of jurisdictional facts sufficient to withstand the defendant's motion to dismiss.

The facts disclosed by the complaint, which is in three counts, and by the affidavits, are as follows. Plaintiff, Scullin Steel Company, is a Delaware corporation with its principal place of business in St. Louis, Missouri. Defendant, National Railway Utilization Corp. (NRUC), is a South Carolina corporation with its principal place of business in Philadelphia, Pennsylvania. Plaintiff is engaged in the manufacture of steel castings used in the manufacture of railroad cars; defendant is engaged in the business of manufacturing and leasing railroad cars. Defendant is not authorized to do business in Missouri; it has no office or personnel in Missouri, owns no real property in Missouri, and does not have any agent for service of process or for any other purpose in Missouri.

In June, 1978, a period of shortage of "car sets," or side frames and bolsters, Mr. Robert Peters, plaintiff's Vice President of Sales, visited Mr. John A. Mariscotti, Executive Vice President of defendant, in Philadelphia, Pennsylvania, to discuss a contract for the sale of railroad car sets by plaintiff to defendant. On June 12, in Philadelphia, Mr. Mariscotti signed a Sales Agreement prepared by plaintiff. Two weeks later plaintiff submitted a slightly altered Sales Agreement to Mr. Mariscotti in Philadelphia, which Mr. Mariscotti signed in that city on June 26, 1979. Defendant sent the executed Agreement to plaintiff in St. Louis, where plaintiff signed it. A copy of this contract is annexed to the complaint as Exhibit 1. The new Sales Agreement, which superseded the earlier one, provided that Scullin would sell 2,700 car sets to defendant in the period between January 1, 1979 and December 31, 1981 at the rate of 75 car sets per month, "F.O.B. Seller's Plant, St. Louis, Missouri."

Early in 1979, Mr. Mike Franz, a sales representative of plaintiff, called Carolyn Wilson, purchasing agent for defendant, and also visited defendant's offices in Philadelphia, to discuss a possible extension of the Sales Agreement. The parties' affidavits differ as to the degree of persuasion exercised by Mr. Franz. The details of the amendment were worked out in telephone conversations between Mr. Franz and Ms. Wilson. On April 20, 1979, in Philadelphia, Robert Shiner, Senior Vice President of Operations of defendant, signed the "Amendment to Sales Agreement" (Amendment), a copy of which is attached to the complaint as Exhibit 2. The Amendment had been drafted by Mr. Franz in accordance with his conversations with Ms. Wilson. The Amendment was signed by plaintiff in St. Louis, Missouri. The Amendment extended the period of the Agreement for an additional two years, and provided for the sale of 1,862 additional car sets. The Amendment incorporated the remaining terms of the Agreement. No employee or representative of defendant visited Missouri in negotiating or entering into these contracts or in connection with any other aspect of this action.

All manufacturing done by plaintiff under the Agreement and Amendment were done in plaintiff's only plant which is, and always has been, located in St. Louis, Missouri. The car sets were inspected by defendant on arrival in Pickens, South Carolina, and when the car sets were defective, plaintiff sent its quality control personnel to Pickens to inspect and accept the defective parts. All payments made by defendant were sent to plaintiff's office in St. Louis, Missouri; all shipments of castings to defendant were made from plaintiff's St. Louis plant.

Defendant specified certain details for the castings and plaintiff's engineering department in St. Louis prepared drawings of the castings which were sent to NRUC for approval. By letter dated August 30, 1978, addressed to plaintiff's Vice President-Engineering in St. Louis, defendant's Consulting Engineer approved the drawings submitted by plaintiff for an initial order of 2,169 car sets. Subsequent orders were handled in a similar manner. However, the car sets manufactured by plaintiff for defendant were interchangeable with respect to any railway cars having a 70-ton load capacity (approximately 70% of all rolling stock in the United States). Plaintiff decided to manufacture the ordered parts with holes for dead-lever fulcrum brackets, even though defendant had not required such holes, for the use of any possible subsequent owner. Of the 6,362 car sets which were the subject of the Agreement, as amended, approximately 87 car sets were received and put in use by defendant. The invoice price of the received car sets was $109,642.53, which defendant has refused and failed to pay. An additional number of castings, approximately 29 car sets and 199½ bolsters, were received by defendant but returned to plaintiff for credit.

During the first five months of 1980 there was a series of meetings between representatives of plaintiff and defendant at which a possible resolution of the instant claims was discussed. All of these meetings occurred in Philadelphia. A Creditors' Committee of defendant established a plan of reorganization on June 6, 1980. All of the Committee meetings have been held in Philadelphia, except for one meeting in Boston.

Service was had on defendant in Philadelphia, Pennsylvania, pursuant to the Missouri long-arm statute, § 506.500 R.S.Mo.1978. Because the Missouri Supreme Court has interpreted the reach of § 506.500 to be coextensive with that of due process, State ex rel. Deere and Company v. Pinnell, 454 S.W.2d 889, 892 (Mo.1970), the question is whether defendant has had such "minimum contacts" with Missouri that maintenance of this action would be consistent with "`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) (citations omitted), inherent in the concept of due process. The Supreme Court elaborated upon the minimum contacts test in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), stating that

the unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws. Citing International Shoe, supra.

357 U.S. at 253, 78 S.Ct. at 1239.

Most recently, the Supreme Court has elaborated upon the "minimum contacts" test in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). In holding that an Oklahoma state court had improperly exercised jurisdiction over a New York automobile distributor and a New York retail dealer, one of whose automobiles, purchased in New York, was involved in an accident in Oklahoma, the Court stated that the "minimum contacts" requirement performs "two related, but distinguishable, functions": it protects the defendant against unreasonable burdens of litigation, and it protects the status of the states as coequal federated sovereigns. In discussing the second function, the Court stated that

even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment. Citing Hanson v. Denckla, supra.

444 U.S. at 294, 100 S.Ct. at 565.

In the instant case, plaintiff was not contractually required to manufacture the goods in St. Louis, although delivery was to be made F.O.B. Seller's Plant, St. Louis. However, the Court believes that the reasonable inference from the submitted materials is that defendant fully anticipated that the goods sold under the contract would be manufactured in St. Louis, as that was the location of plaintiff's only plant. Thus the instant case presents a factual pattern nearly identical to that of Lakeside Bridge & Steel Co. v. Mountain State Construction Co., Inc., 597 F.2d 596 (7th Cir. 1979), cert. denied 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980). In Lakeside Bridge, the plaintiff, a Wisconsin corporation, sued the defendant, a West Virginia corporation with its principal place of business in West Virginia, on a contract for the sale by plaintiff to defendant of certain structural assemblies. Delivery of the assemblies was to be made "F.O.B. Sellers Plant Milwaukee, Wisconsin...." Defendant had no physical presence whatever in Wisconsin. The Seventh...