Superfos Investments v. FirstMiss Fertilizer, Inc.

• Decision Date: 27 September 1991
• Docket Number: Civ. A. No. 91-293-N.
• Citation: 774 F. Supp. 393
• Parties: SUPERFOS INVESTMENTS LIMITED, t/a Superfos Trading, Inc., Plaintiff, v. FIRSTMISS FERTILIZER, INC., Defendant.
• Court: U.S. District Court — Eastern District of Virginia

774 F. Supp. 393

SUPERFOS INVESTMENTS LIMITED, t/a Superfos Trading, Inc., Plaintiff, v. FIRSTMISS FERTILIZER, INC., Defendant.

Civ. A. No. 91-293-N.

United States District Court, E.D. Virginia, Norfolk Division.

September 27, 1991.

COPYRIGHT MATERIAL OMITTED

John Y. Pearson, Jr. and Amy Lynn Moss, Willcox & Savage, P.C., Norfolk, Va., for plaintiff.

Kenneth H. Lambert, Jr. and Raymond Lee Hogge, Jr., Williams, Worrell, Kelly, Greer, Norfolk, Va., for defendant.

MEMORANDUM OPINION AND ORDER

CLARKE, District Judge.

This matter comes before the Court on Plaintiff's Motion to Dismiss for Lack of In Personam Jurisdiction and Improper Venue, or in the alternative, for the transfer of the action to a proper forum. For the reasons set out more fully below, Defendant's Motion to Dismiss is DENIED. However, Defendant's Motion to Transfer the case to a court having personal jurisdiction over the Defendant and proper venue is GRANTED.

Facts

On or about April 1, 1988, Superfos Investments Limited¹ ("Superfos"), a Delaware corporation with its principal place of business in Virginia Beach, Virginia, and FirstMiss Fertilizer, Inc. ("FirstMiss"), a Mississippi corporation with its principal place of business in Jackson, Mississippi, entered into a contract for the purchase and sale of a liquid fertilizer called anhydrous ammonia (the "contract"). The contract required FirstMiss to purchase not less than eighty thousand (80,000) and not more than one hundred twenty thousand (120,000) tons of anhydrous ammonia (sometimes referred to as the "product") each year for the term of the contract, which was scheduled to terminate on December 31, 1990. Delivery of the product was accomplished by means of the Gulf Central Pipeline. The pipeline extends across several states and numerous suppliers and users have access to the product by opening and closing valves leading to and from the pipeline for a time period sufficient to allow the desired amount to enter or leave the pipeline.

Superfos purchased the product it sold to FirstMiss from Farmland, Inc. of Pollock, Louisiana ("Farmland"). It was delivered from Farmland's facilities in Louisiana directly to FirstMiss' facilities in Mississippi or Louisiana or to its customers outside Virginia. Therefore the anhydrous ammonia was never moved into, through or out of Virginia. The contract also required FirstMiss to prepare and deliver, on a quarterly basis, a forecast amount of anhydrous ammonia it intended to purchase from Superfos. Notice of the amount to be purchased, as well as any product orders, delivery instructions, complaints or problems regarding the quality or quantity of the product were all directed to Superfos' Virginia beach office. Monthly payments were to be made to a bank designated by Superfos. Superfos generally requested that payments be made to its Virginia bank account, but on at least three occasions, they required that payment be sent to banks in New York. Also, the parties agreed that the contract would be governed by the laws of the Commonwealth of Virginia.

Superfos alleges that in 1989 and 1990, FirstMiss purchased less than the minimum required amount of anhydrous ammonia and brought this diversity action against FirstMiss to recover damages arising from the alleged breach of contract. FirstMiss responded to Superfos' complaint with a Motion to Dismiss, or in the alternative, for a transfer of the action to a proper forum on the following grounds: (1) lack of personal jurisdiction over the Defendant; and (2) improper venue.

FirstMiss is a Mississippi corporation with its principal place of business in Jackson, Mississippi. All of its offices, plants and facilities are located in Mississippi and Louisiana. It is not presently, and has never been, qualified to do business in Virginia. Superfos initiated contract negotiations with FirstMiss at a conference held in West Virginia. All subsequent negotiations occurred by means of telephone calls, correspondence and facsimile transmissions between Mississippi and Virginia. At no time did any agent, employee or representative of FirstMiss travel to Virginia with respect to the contract negotiations or in connection with the administration of the contract once formed. The contract was drafted by Superfos and formed in Mississippi by virtue of FirstMiss adding the final signature in Jackson, Mississippi.

FirstMiss has never maintained any office, plant or distributor in Virginia nor has it ever had any personnel, employees², telephones or bank accounts in Virginia. It has never had a registered agent in Virginia. FirstMiss has never owned any real or personal property in Virginia or had equipment or assets in Virginia. It has paid no corporate income taxes or franchise taxes in Virginia. FirstMiss has advertised in Virginia only to the extent that advertisements placed in national trade journals may reach Virginia.

However, in addition to the contract at issue in this case, FirstMiss has been a party to three other sales transactions connected to Virginia. The first was a sale to Mobil Oil Co., a New York corporation with its principal offices in New York City, on March 31, 1990. The sale was arranged through Mobil's office in Richmond, Virginia. The product sold was shipped from FirstMiss' facilities in Mississippi to Mobil's facilities in Texas.

The second sales transaction involved FirstMiss and Southern States Cooperative, Inc. of Richmond, Virginia. Again the product sold never entered Virginia, it was delivered to Iowa and Kentucky from November 13, 1990 to June 20, 1991. This contract is now expired.

Finally, FirstMiss sold its product to Allied-Signal Inc., a Delaware corporation with its principal of business in Morristown, New Jersey. Here the product was shipped to Virginia at the request of Allied, but FirstMiss contends that the sale and transfer of title occurred in Louisiana, the terms of sale being F.O.B. Louisiana. This contract involved deliveries over the course of several months, which ended in October 1990. These contracts constitute approximately eight-tenths of one percent (.79%) of FirstMiss' overall sales. FirstMiss' additional sales efforts in Virginia consist of three sales calls by one salesman on August 7 and 8, 1990 and on May 15, 1991.

Analysis

Generally, the analysis of in personam jurisdiction requires two steps. First, the Court must determine whether the activity of the defendant falls within the state's long arm statute. Second, the Court must decide whether the exercise of personal jurisdiction would violate the Due Process Clause of the Fourteenth Amendment of the Constitution. Peanut Corp. of America v. Hollywood Brands, Inc., 696 F.2d 311, 313 (4th Cir.1982). However, the Virginia Supreme Court has held that the Virginia Long Arm Statute, Virginia Code Ann. § 8.01-328.1 (1984 Repl.Vol. & Supp. 1991), extends personal jurisdiction to the full extent permitted by due process. Id.; Danville Plywood Corp. v. Plain and Fancy Kitchens, Inc., 218 Va. 533, 534, 238 S.E.2d 800 (1977). Also, the scope of the "transacting business" requirement of the statute, § 8.01-328(A)(1), has specifically been construed to be limited only by the bounds of due process. Bassett Furniture Industries, Inc. v. Sexton, 596 F.Supp. 454, 456 (W.D.Va.1984); Medeco Security Locks, Inc. v. Fichet-Bauche, 568 F.Supp. 405, 408 (W.D.Va.1983). Therefore the only issue to be determined is whether FirstMiss' activities in Virginia are such that in personam jurisdiction may be exercised over it without violating due process. Bassett Furniture, 596 F.Supp. at 456.

In order to exercise in personam jurisdiction over a defendant, he must have certain minimum contacts with the forum 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). The key factor is 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." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). Therefore it is necessary to examine carefully the nature of FirstMiss' contacts with Virginia in order to determine whether it may be fairly subjected to suit. The Court will first address the activities in Virginia giving rise to this action and then discuss the additional contacts with the Commonwealth unrelated to this action, as these different types of contacts³ are judged by different standards. General jurisdiction requires "continuous and systematic" contacts with the forum. A less strict standard applies to specific jurisdiction. Chung v. NANA Development Corp., 783 F.2d 1124, 1130 (4th Cir.1986) (Ervin, J., dissenting); see Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16, 104 S.Ct. 1868, 1872-73, 80 L.Ed.2d 404 (1984).

The burden of proving in personam jurisdiction rests with the plaintiff. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Medeco, 568 F.Supp. at 407. Here Plaintiff Superfos asserts that FirstMiss' negotiation and performance of the contract with Superfos is sufficient to establish that FirstMiss has transacted business within the Commonwealth and is thus subject to the jurisdiction of the Court. As support for its contention, Superfos points out that Virginia's Long Arm Statute is a single transaction statute requiring only a single act of transacting business by the defendant within the state to support in personam jurisdiction. I.T. Sales, Inc. v. Dry, 222 Va. 6, 9, 278 S.E.2d 789 (1981); Willis v. Semmes, Bowen & Semmes, 441 F.Supp. 1235, 1240 (E.D.Va.1977); John G. Kolbe, Inc., v. Chromodern, Inc., 211 Va. 736, 180 S.E.2d 664 (1971). Superfos contends that its dealings with FirstMiss meet this requirement. However, the facts of ...