Textile Technology Exchange, Inc. v. Davis
| Decision Date | 01 April 1993 |
| Parties | , 611 N.E.2d 768 TEXTILE TECHNOLOGY EXCHANGE, INC., Respondent, v. Jack DAVIS, Appellant. |
| Court | New York Court of Appeals Court of Appeals |
Plaintiff is a North Carolina corporation which buys and sells new and used textile mill equipment. Defendant is a New York rigger who handles the removal, transporting, repair and resale of such equipment. Plaintiff commenced this action for breach of a February 1986 oral partnership agreement in which defendant was to sell equipment owned by the plaintiff and divide the profits equally. It was alleged that the defendant did not account for the proceeds of the sale of various equipment. Defendant denied the allegations, asserted the affirmative defense of lack of personal jurisdiction (improper service), and asserted a counterclaim based upon "an agreement heretofore entered into between the parties to this action, wherein and whereby the plaintiff agreed to compensate the defendant for certain goods and services provided by the defendant, within six (6) years last past" for sums due and owing.
At the conclusion of the trial, defendant moved to dismiss the complaint for lack of jurisdiction. The trial court denied the motion, holding that the jurisdictional defense had been waived by the assertion of a counterclaim that was unrelated to the plaintiff's claim. This was based upon the finding that the complaint was based upon a contract "entered into in February, 1986" but the counterclaim involved "several transactions which arose prior to February 1986." On the merits, the trial court ruled that plaintiff's proof established a breach by the defendant, awarded damages and dismissed the counterclaim because the defendant had failed "to establish his cause of action."
By a 3 to 2 majority, the Appellate Division agreed that the jurisdictional defense had been waived because the counterclaim was unrelated to the plaintiff's claim. 182 A.D.2d 1029, 583 N.Y.S.2d 44. The majority found that the parties began a business relationship in 1985 when plaintiff, acting as the liquidator of equipment at the Industrial Knitted Fabrics (IKF) plant, referred business to defendant. In February 1986, the relationship changed when plaintiff purchased the majority of the IKF equipment and entered into the oral partnership agreement with defendant. The majority concluded:
"Because it is solely this latter agreement which is the subject of plaintiff's complaint, defendant's assertion of a counterclaim involving various transactions predating that agreement amounted to the assertion of an unrelated counterclaim, thereby resulting in a waiver of his jurisdictional objection (see, Prezioso v. Demchuk, 127 A.D.2d 576, lv. dismissed 70 N.Y.2d 1002[, 526 N.Y.S.2d 438, 521 N.E.2d 445]; Liebling v. Yankwitt, 109 A.D.2d 780, 781" (182 A.D.2d 1029, 1030, 583 N.Y.S.2d 44).
The majority also found that the record supported the award of damages to plaintiff and the dismissal of the counterclaim.
The dissenters essentially concluded that there was an ongoing relationship between the parties involving a series of transactions concerning the sale of the contents of the IKF plant that began in 1985 and was basically unaltered by the February 1986 oral partnership agreement. Since the complaint and the counterclaim were based upon transactions during the course of that relationship, it was reasoned that they were sufficiently related to allow the jurisdictional objection to remain.
Defendant appeals as of right because of the two-Justice dissent (see, CPLR 5601[a].
The issue before us is whether the defendant waived his jurisdictional defense by bringing...
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In re Houbigant, Inc.
...defenses by assertion of counterclaim where no controlling federal rule could be found): Textile Technology Exchange v. Davis, 81 N.Y.2d 56, 595 N.Y.S.2d 729, 611 N.E.2d 768 (1993) (holding that defendant waived affirmative defense of lack of personal jurisdiction by asserting counterclaim ......
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...663 N.Y.S.2d 88 [participation in discovery did not waive defense of lack of personal jurisdiction]; cf. Textile Tech. Exch. v. Davis, 81 N.Y.2d 56, 59, 595 N.Y.S.2d 729, 611 N.E.2d 768 [the assertion of an unrelated counterclaim results in a waiver of the defense of lack of personal jurisd......
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...was likewise waived by defendant's assertion of a counterclaim unrelated to this action (see Textile Tech. Exch. v. Davis, 81 N.Y.2d 56, 58–59, 595 N.Y.S.2d 729, 611 N.E.2d 768 [1993] ; GE Capital Mtge. Servs. v. Mittelman, 238 A.D.2d 471, 471, 656 N.Y.S.2d 645 [1997] ). In light of the for......
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150 W. End Owners Corp. v. Chestnut Holdings of N.Y. Inc.
...defense it may have had since it is taking affirmative advantage of the court's jurisdiction. Textile Technology Exch., Inc. v. Davis, 81 N.Y.2d 56, 58–59, 595 N.Y.S.2d 729, 611 N.E.2d 768 (1993). In Textile, the counterclaims at issue were not related because they concerned a transaction d......