Snyder v. Hampton Industries, Inc.
Decision Date | 31 July 1981 |
Docket Number | Civ. A. No. M-81-348. |
Citation | 521 F. Supp. 130 |
Parties | Paul SNYDER and Mens and Boys Apparel Mart, Inc. v. HAMPTON INDUSTRIES, INC. |
Court | U.S. District Court — District of Maryland |
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George W. Liebmann and Stephen L. Snyder, Baltimore, Md., for plaintiffs.
Robert G. Levy, John M. Belferman, and Frank, Bernstein, Conaway & Goldman, Baltimore, Md., for defendant.
This case is presently before the court on the defendant's motion to dismiss for lack of personal jurisdiction and improper venue, Rule 12(b)(2) and (3), Fed.R.Civ.P., or in the alternative, for transfer to the United States District Court for the Eastern District of North Carolina.1The plaintiffs have filed a response opposing the defendant's motion,2 and the defendant has filed a reply to the plaintiffs' response and a supplemental memorandum.3The court having heard argument by counsel on July 17, 1981, the above-listed motions are now ready for disposition.Since the defendant's motion under Rule 12(b)(2) raises important questions concerning the statutory and constitutional limitations of Maryland's long arm statute, Md. Cts. & Jud.Proc.Code Ann. § 6-103(1980 Rep.Vol.), the background of this case will be set out in some detail.
The plaintiffs, Paul Snyder and Mens and Boys Apparel Mart, Inc., brought this breach of contract action against the defendant, Hampton Industries, Inc., in February of 1981.Service of the summons and complaint was made upon Hampton by a private process server in North Carolina, pursuant to Rule 107,Maryland Rules of Procedure.See Local Rule 25.In Count I of the complaint, the plaintiffs allege that Hampton has breached a contract between the parties by failing to pay commissions earned by the plaintiffs, and by failing to abide by its delivery obligations regarding the shipment of goods to customers whose purchase orders were obtained by the plaintiffs.Count I also charges Hampton with fraudulently concealing the nonpayment of commissions, and with exercising duress upon plaintiff Snyder to forestall his taking legal action.In Count II, Hampton is alleged to have breached a settlement agreement entered into by the parties in Pennsylvania regarding the nonpayment of the commissions.Subject matter jurisdiction is alleged under 28 U.S.C. § 1332(a).
Snyder, a citizen of Maryland, is the president of Mens and Boys Apparel Mart, Inc., a Maryland corporation that has its principal place of business in Baltimore City.Hampton is incorporated under the laws of North Carolina, and alleges that its principal place of business is Kinston, North Carolina, although it has a sales office in New York City.Hampco Apparel, Inc., a wholly-owned subsidiary of Hampton, is incorporated in and licensed to do business in Maryland.4Hampco has not been named as a defendant in this action.
The plaintiffs allege that the relationship between the parties began in 1951.On February 13, 1951, the plaintiffs entered into a written selling agency agreement with Samsons, Inc., the corporate predecessor of the defendant.5Under that agreement, the plaintiffs were appointed a "selling agency" and the "exclusive representative" of Samsons' clothing lines in Maryland, Delaware, Pennsylvania, the District of Columbia, and Northern Virginia.6In Addition, Samsons agreed to furnish the plaintiffs with certain documents pertaining to the accounts in the selling area, and to "deliver 90% of all accepted orders."
Hampton admits that Samsons was its corporate predecessor, but asserts that the written agreement was terminated in 1967.Hampton concedes, however, that it maintained a business relationship with the plaintiffs on a "verbal basis," and continued to pay commissions on orders solicited from Maryland customers.The plaintiffs contend that only the commission rate aspect of the 1951 agreement has been modified.According to the plaintiffs, the parties continued to operate under all of the other terms set out in the written agreement.
The exact nature of the parties' relationship is not entirely clear.Based on the affidavits and other materials submitted by the parties, however, the basic outline of their dealings appears to be as follows.The plaintiffs solicit purchase orders from customer accounts in Maryland and the other states within the selling territory for Hampton products, including the Hampco lines.Customer orders are recorded on special purchase order forms supplied to the plaintiffs by Hampton.The plaintiffs allege that such activity has been continuous since 1951, and that the value of the orders obtained from Maryland customers in the last calendar year exceeded one million dollars.
The purchase orders obtained by the plaintiffs are forwarded to Hampton's office in New York City.The New York City office then sends the purchase orders to Hampton's office in Kinston, North Carolina.When the purchase orders are approved, they are entered into a computer according to the plaintiffs' sales representative number.The computer prepares a printout of all of the orders when the goods are shipped and invoiced to the customers.Hampton alleges that its sales contracts with the account customers provide that the goods are to be shipped by common carrier, either F.O.B. Kinston or Snow Hill, North Carolina, or F.O.B. Martinsville, Virginia.Commissions paid by Hampton to the plaintiffs are based on actual shipments of goods to the account customers.Payment of commissions is by mail, with Hampton's check drawn on either a North Carolina or a New York bank.
With respect to Hampton's Maryland "contacts," the affidavit of Sol Schechter, its president,7 states that: (1) Hampton has never been licensed to do business in Maryland; (2) Hampton maintains no bank accounts or other assets in Maryland; (3) Hampton has never had an office, place of business, or a telephone listing in Maryland; (4) Hampton has never had agents, servants, or employees in Maryland; (5) all meetings with the plaintiffs were held outside of Maryland; (6)the plaintiffs have never entered into any contract with Hampco; and (7) neither of the plaintiffs has ever had the authority to enter into contracts with the account customers on behalf of Hampton.Hampton further contends that the plaintiffs are independent contractors, and that all purchase orders obtained by them must be approved by Hampton at its office in Kinston, North Carolina.The invoices for merchandise sold by Hampton to the account customers are issued in North Carolina, and the customers mail their payments either directly to Hampton's North Carolina office, or to a "lock box" in Pennsylvania.
According to the plaintiffs, Hampton sends them prepared promotional literature for distribution to Hampton's customers within the plaintiffs' selling area, and authorized the plaintiffs to list Hampton and Hampco in the Baltimore City business telephone directory as having an office at the plaintiffs' place of business in Baltimore City.The plaintiffs also note that Hampton corresponds directly with Maryland customers regarding the purchase orders obtained by the plaintiffs, and that Hampton's 1979 and 1980 annual reports state that Hampton maintains "regional sales offices" in several cities, including Baltimore.The promotional literature supplied to the plaintiffs by Hampton also lists the plaintiffs' place of business in Baltimore as a Hampton "showroom."
The Maryland long arm statute defines the circumstances under which Maryland courts may exercise personal jurisdiction over nonresident defendants.It provides as follows:
Md. Cts. & Jud. Proc. Code Ann. § 6-103(1980 Rep. Vol.).
In Craig v. General Finance Corp. of Illinois,504 F.Supp. 1033(D. Md.1980), this court outlined the analysis to be employed when jurisdiction is asserted under the long arm statute.
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In re Air Crash Disaster at Gander, Newfoundland
...said that the cause of action does not arise from that contract.") (construing Tennessee long arm statute); Snyder v. Hampton Industries, Inc., 521 F.Supp. 130, 139-41 (D.Md.1981), aff'd, 758 F.2d 649 (4th Cir.1985) ("cause of action" and "arising from" language in Maryland long arm statute......
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In re Air Crash Disaster at Washington, DC
...be followed by a federal court if the state court would not do so. See, e.g., Boston, at 1109; see generally Snyder v. Hampton Industries, Inc., 521 F.Supp. 130, 137 (D.Md.1981). The most recent statement of Maryland's highest court on the issue of choice of law principles was in 1975 when ......
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...exercise of personal jurisdiction comport with the constitutional requirements of the Due Process Clause. Snyder v. Hampton Industries, Inc., 521 F.Supp. 130, 135 (D.Md.1981); Craig v. General Finance Corp. of Illinois, 504 F.Supp. 1033 (D.Md. The Maryland Long Arm Statute, Md. Cts. & Jud.P......
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