Tjs Brokerage & Co., Inc. v. Mahoney

• Decision Date: 18 September 1996
• Docket Number: No. 96-CV-3003.,96-CV-3003.
• Citation: 940 F.Supp. 784
• Parties: TJS BROKERAGE & CO., INC., Plaintiff, v. Thomas P. MAHONEY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

940 F.Supp. 784

TJS BROKERAGE & CO., INC., Plaintiff, v. Thomas P. MAHONEY, et al., Defendants.

No. 96-CV-3003.

United States District Court, E.D. Pennsylvania.

September 18, 1996.

COPYRIGHT MATERIAL OMITTED

Paul D. Keenan, Marguerite S. Walsh, Paul B. Halligan, Buchanan Ingersoll P.C., Philadelphia, PA, for Plaintiff.

Thomas P. Mahoney, North Merrick, NY, pro se.

Cost Control Consultants Corp., North Merrick, NY, for Cost Control.

Andrew L. Miller, Paul & Miller, Bala Cynwyd, PA, John J. Petriello, Levy, Ehrlich & Kronenberg, Newark, NJ, for Garden State and Hanover.

MEMORANDUM AND ORDER

JOYNER, Judge.

Plaintiff TJS Brokerage & Co., Inc. ("TJS") has brought this diversity action against Defendants Thomas P. Mahoney ("Mahoney"), Cost Control Consultants Corporation ("Cost Control"), Garden State Consolidating, Inc. ("Garden State"), and Hanover Warehouse, Inc. ("Hanover") pursuant to 28 U.S.C. § 1332. Defendant Mahoney has filed a pro se motion to dismiss TJS's complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) or, alternatively, to transfer the action to the Southern District of New York. Defendants Garden State and Hanover have jointly moved to dismiss TJS's complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) or, in the alternative, to transfer the action to the District of New Jersey, Newark Division. Plaintiff TJS has opposed the defendants' motions and asked the Court in the alternative, to grant it an opportunity to conduct discovery in order to ascertain whether a sufficient basis for personal jurisdiction over the defendants exists. Defendant Cost Control has not appeared in this action.

BACKGROUND

TJS is a motor carrier freight broker located in Philadelphia and licensed to transport commodities on behalf of various shippers. In its complaint, TJS alleges that on January 20, 1993, TJS entered into an exclusive agency agreement with Cost Control, a New York corporation whose sole shareholder and president is Defendant Mahoney. The agreement called for Cost Control to broker freight shipments and procure carriers for transportation on behalf of TJS. Pursuant to the agency agreement, Mr. Mahoney agreed to personally guarantee any and all obligations owed by Cost Control to TJS. The agreement also contained non-compete and non-disclosure covenants to protect proprietary information and documents that TJS had accumulated and to which Mahoney and Cost Control would have access. These covenants were to be effective for two years after the termination of the agency relationship.

TJS alleges that in the fall of 1994, Cost Control, through Mr. Mahoney, notified TJS that it was terminating the agreement because Cost Control had decided to handle only air freight. TJS also asserts that Cost Control violated the non-compete clause by directing business previously given to TJS to other freight brokers and shipper's agents, including Hanover, a New Jersey company that operates a public warehouse, and Garden State, a New Jersey-based freight forwarder.

The complaint contains four counts. In Count I, TJS asserts a breach of contract claim against Defendants Cost Control and Mahoney. TJS alleges that Cost Control breached the agency agreement by competing with TJS within two years of the termination of the agency agreement, soliciting business from and doing business with carriers and customers of TJS, and directing TJS' business to Hanover and Garden State.

TJS asserts in Count II that Garden State and Hanover, which are allegedly related entities, tortiously interfered with the contractual relationship between TJS and Cost Control.

In Count III, TJS alleges that all of the defendants tortiously interfered with TJS's contractual relations with its customers and clients by improperly using proprietary information and documents developed by TJS.

Finally, in Count IV, TJS alleges that all of the defendants conspired to misappropriate TJS's customers, trade secrets and proprietary information and to interfere with TJS' contractual and business relations in order to unfairly compete with TJS.

DISCUSSION

I. MOTION TO DISMISS

STANDARD OF REVIEW

Once a defendant raises a personal jurisdiction defense, the plaintiff bears the burden of coming forward with a set of facts sufficient to create a prima facie case of jurisdiction. Mellon Bank PSFS v. Farino, 960 F.2d 1217, 1223 (3d Cir.1992); Provident Nat'l Bank v. California Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir.1987). Plaintiff's jurisdictional allegations must be supported with appropriate affidavits or documents, because a Rule 12(b)(2) motion "requires resolution of factual issues outside the pleadings." Time Share Vacation Club v. Atlantic Resorts, Ltd, 735 F.2d 61, 67 n. 9 (3d Cir.1984); Strick Corp. v. A.J.F. Warehouse Distrib., Inc., 532 F.Supp. 951, 953 (E.D.Pa. 1982). Any conflict in affidavits submitted by plaintiff and defendant is resolved in favor of the plaintiff. DiMark Marketing v. Louisiana Health Serv., 913 F.Supp. 402, 404 (E.D.Pa.1996).

A federal district court is permitted to exercise "personal jurisdiction over a nonresident of the state in which the court sits to the extent authorized by the law of that state." Provident, 819 F.2d at 436 (citing Fed.R.Civ.P. 4(e)).

Pennsylvania's long-arm statute provides for both general and specific personal jurisdiction. General jurisdiction exists when the non-resident defendant is deemed "present" in the state by virtue of its voluntary actions, such as maintaining continuous and substantial forum contacts, consenting to jurisdiction, or being domiciled in the state. 42 Pa.Cons.Stat.Ann. § 5301. Specific personal jurisdiction is found if the cause of action arises through any one of the following contacts with the state: (1) transacting business in Pennsylvania (2) contracting to supply services or things in the Commonwealth (3) causing harm or tortious injury by an act or omission in Pennsylvania (4) causing harm or tortious injury in Pennsylvania by an act or omission outside the state (5) having an interest in or using or possessing real property in the state (6) engaging in the insurance business in the state (7) accepting an election or appointment in the state (8) executing a bond (9) making an application to a governmental unit for any certification, license or similar instrument or (10) committing a violation within the state of any law or court order. 42 Pa.Cons.Stat.Ann. § 5322(a)(1)-(10).

Pennsylvania's jurisdiction extends to the "fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." § 5322(b). The due process limit of long-arm jurisdiction is defined in a series of Supreme Court decisions including International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); and Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). The Supreme Court has held that jurisdiction is proper when a defendant purposefully establishes "minimum contacts" in the forum state, by deliberately engaging in significant activities or by creating continuing obligations such that he has "availed himself of the privilege of conducting business there." Burger King, 471 U.S. at 476, 105 S.Ct. at 2184; International Shoe, 326 U.S. at 316, 66 S.Ct. at 158. These acts must be "such that [a defendant] should reasonably anticipate being haled into court [in the forum State]." World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. Further, the exercise of jurisdiction must comport with "traditional notions of fair play and substantial justice." Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940). Thus, when determining whether personal jurisdiction exists, courts must resolve the question based on the circumstances that the particular case presents. Burger King, 471 U.S. at 485, 105 S.Ct. at 2189.

A. Jurisdiction Over Mr. Mahoney

Defendant Mahoney was the sole shareholder and president of Cost Control, which eventually went out of business in March 1995. Since February 1995, Mahoney has conducted business in his own name or that of Cost Control. TJS asserts that it has jurisdiction over Defendant Mahoney because he visited TJS' office in Pennsylvania to inspect TJS' facilities and meet TJS personnel. Furthermore, the agency agreement at issue was executed in Pennsylvania and Mahoney was paid from TJS' Pennsylvania office. Lastly, Mahoney had training and support from the TJS home office in Pennsylvania.

Defendant Mahoney claims that the only time he visited the plaintiff's office was in September 1992 as an agent for the North East Air Transport. He further claims that all billing was handled from his office in New York, that any training he received was received in his New York office, that there was no home office support from TJS, that he was solicited in New York by the plaintiff, and that the agreement was signed in his office in New York. Finally, Mahoney makes the point that any business he conducted was not only exclusively done in New York, but it was in furtherance of plaintiff's business, not his or Cost Control. Nevertheless, Mahoney does admit that he made phone calls to Pennsylvania in furtherance of his business with TJS.

Plaintiff has not alleged that Defendant Mahoney had any of the above mentioned contacts with Pennsylvania other than in his capacity as agent for Cost Control, and generally a defendant is not individually subject to personal jurisdiction merely based on his actions in a corporate capacity. Moran v. Metropolitan District Council, 640 F.Supp. 430, 433 (E.D.Pa.1986). Courts have held that in order to hold such a defendant subject to personal jurisdiction, it must be shown that the defendant had a major role in the...