Stone v. Chung Pei Chemical Industry Co. Ltd.
| Decision Date | 05 May 1986 |
| Citation | 790 F.2d 20 |
| Parties | Richard STONE, Plaintiff-Appellant, v. CHUNG PEI CHEMICAL INDUSTRY CO. LTD and Taiwan Hi Dap Corporation, Defendants-Appellees. Docket 86-7001. |
| Court | U.S. Court of Appeals — Second Circuit |
Richard Stone, pro se plaintiff-appellant.
Before MANSFIELD, CARDAMONE and PIERCE, Circuit Judges.
Richard Stone, a resident of New York, filed a pro se diversity complaint in the United States District Court for the Southern
District of New York (Brieant, J.) against two Taiwanese corporations, one of which answered and moved to dismiss on the grounds that it was not subject to the court's jurisdiction and that a contract between plaintiff and it had been cancelled by consent. The other corporation never appeared or answered. The district court dismissed the complaint as frivolous. We reverse and remand.
The facts alleged in the pro se complaint, assumed to be true, reveal that in April 1977 Stone entered into a contract with Chung Pei Chemical Co. Ltd. (Chung Pei). Under its terms, Chung Pei was to produce high gloss wax tiles in Taiwan and Stone was to have the exclusive right to market them in the United States and Canada. Stone stayed in Taiwan for over a year giving technical assistance to Chung Pei, while also making several marketing trips to the United States.
In March 1978 Stone met Mr. Nagase, President of Fuji Polymer, Inc. (Fuji) of Japan, who agreed to assume production and quality control of the tiles that were produced by Chung Pei. Stone and Nagase together acquired Griddan, Ltd., a Hong Kong company, through which all tile sales would be channeled. Stone introduced Mr. Hsieh, president of Chung Pei, to Nagase, and the three discussed cancelling Stone's contract with Chung Pei and entering into a new contract between Chung Pei and Griddan. At this May 1978 meeting, Stone and Hsieh signed an agreement cancelling Stone's contract with Chung Pei, on the understanding that Chung Pei would enter into a contract with Griddan.
Nagase then persuaded Stone that the new contract with Chung Pei should be with Fuji, rather than with Griddan. In return, Stone was to receive advances on various expenses as well as medical and life insurance from Fuji. Nagase also agreed to give Stone a contract providing him with 50 percent of Fuji's profits from the venture with Chung Pei. The contract Stone eventually signed with Fuji was allegedly for far less than he had negotiated. After Fuji went bankrupt in the fall of 1983, customers Stone had secured, including two in New York, made agreements directly with Chung Pei.
Stone asserts that the cancellation of his contract with Chung Pei was procured through Nagase's fraud and that his original contract is still valid. Stone also alleges that:
[due to my] arduous efforts made to implement the title contract with Chung Pei, and because of my work in securing Japanese technical assistance that resulted in Chung Pei's acquiring the know-how to supply a quality tile for the American marketplace, Chung Pei has been unjustly enriched to my great detriment and loss.
The other Taiwanese corporation, Taiwan Hi Dap Corporation, was an affiliate of Fuji until 1983. Nagase was also its president. In August 1978, Stone and Nagase agreed to bring Hi Dap into the tile venture. Stone "introduced" Nagase to a Massachusetts' company which makes automatic machines that apply adhesive and paper to floor tile-backs making them self-adhering. Hi Dap purchased this machine and processed tiles from Chung Pei. Stone alleges that Hi Dap sold these tiles to customers Stone had secured in the United States and to former customers of Fuji. He claims that he has an implied contract with Hi Dap and that Hi Dap has been unjustly enriched.
Under New York's long-arm statute Stone's complaint sufficiently states a claim to support personal jurisdiction over the two Taiwanese corporations. New York has personal jurisdiction over a nondomiciliary if two conditions are met. First, the nondomiciliary must be one who "transacts any business within the state or contracts anywhere to supply goods or services in the state...." N.Y.Civ.Prac.Law Sec. 302(a)(1) (McKinney Supp.1986). Second, the claim against the nondomiciliary must arise from the business activity forming the basis for the satisfaction of the first prong. Beacon Enterprises Inc. v. Menzies, 715 F.2d 757, 763 (2d Cir.1983). Such a nexus between the cause...
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