Uni-Bond, Ltd. v. Schultz

• Decision Date: 02 May 1985
• Docket Number: No. 83-C-907.,83-C-907.
• Citation: 607 F. Supp. 1361
• Parties: UNI-BOND, LTD., Plaintiff, v. Leonard SCHULTZ, d/b/a the "Schultz Group", Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

607 F. Supp. 1361

UNI-BOND, LTD., Plaintiff, v. Leonard SCHULTZ, d/b/a the "Schultz Group", Defendant.

No. 83-C-907.

United States District Court, E.D. Wisconsin.

May 2, 1985.

Ross A. Anderson, Milwaukee, Wis., for plaintiff.

Jeffrey Clark, Milwaukee, Wis., for defendant.

DECISION AND ORDER

WARREN, District Judge.

Presently before the Court are the plaintiff's motion to remand this matter to the state court in which the complaint was initially filed, pursuant to 28 U.S.C. § 1447(c), and the defendant's motion to dismiss the action in toto for lack of personal jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. The Court, having reviewed the legal memoranda submitted by the parties and considered the opposing positions articulated therein, concludes, for the reasons set forth below, that the motion to remand must be denied and the motion to dismiss granted.

BACKGROUND

This action was initiated on April 28, 1983, when the plaintiff filed its complaint in the Wisconsin Circuit Court for Milwaukee County, claiming certain damages allegedly arising out of the breach of a written contract entered into by the parties. According to the terms of that contract, executed on or about April 30, 1980, the plaintiff agreed to pay the sum of $250,000.00 plus a royalty of 7% of the gross selling price to purchase a certain chemical formula developed and owned by the defendant. That formula was for a polymer or pre-polymer construction material to be used as a building alternative for concrete and asphalt.

The contract further provided that the plaintiff pay an initial $50,000.00 installment within 21 days of the date of execution and the balance of $200,000.00 in twelve equal quarterly installments, beginning either one year after the first sale of the construction material or eighteen months after execution of the contract, whichever came first. The defendant purportedly agreed to deliver the formula to the plaintiff upon receipt of the initial $50,000.00 payment. However, according to the central factual averment in the complaint, the defendant failed to deliver the chemical formula as promised, despite the plaintiff's payment of the initial installment on or about May 21, 1980.

The two principal causes of action are based on theories of breach of contract, pursuant to which the plaintiff claims damages in the amount of $75,000.00, and fraudulent conversion — that is, that the defendant allegedly failed to return the $50,000.00 installment despite the plaintiff's request for repayment. With respect to this count, the plaintiff seeks $50,000.00 in compensatory damages and an amount not to exceed $250,000.00 in punitive damages.

In the alternative, the complaint states causes of action for intentional and negligent misrepresentation and misrepresentation giving rise to strict liability; these claims are premised on the defendant's purportedly false representation that he had developed and did possess a commercially usable chemical formula for a polymer or pre-polymer building material. By each of these alternative counts, the plaintiff seeks $75,000.00 in compensatory damages plus punitive damages in an amount not to exceed $250,000.00.

Upon the defendant's petition of July 18, 1983, this action was removed to the United States District Court for the Eastern District of Wisconsin, pursuant to 28 U.S.C. §§ 1441 & 1446. Invoking the Court's diversity jurisdiction, as established under 28 U.S.C. § 1332(a)(1), the defendant alleged in its removal petition that the parties to this action are citizens of different states and that the matter in controversy exceeds the sum or value of $10,000.00, exclusive of interest and costs. Accompanying the defendant's petition was an appropriate bond, insuring, pursuant to 28 U.S.C. § 1446(d), that the defendant will pay all expenses attendant upon the removal proceedings if it is determined that the case is not removable or was improperly removed.

Three days later, on July 21, 1983, the defendant filed its motion to dismiss the complaint for lack of personal jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Invoking the well-established principle that a nonresident defendant must have sufficient minimum contacts with a forum state as a condition precedent to the exercise of personal jurisdiction over it, the movant maintains that he does not have the requisite relationship with the State of Wisconsin for purposes of the present action and, accordingly, that the complaint against him must be dismissed. The defendant further contends that both the relevant analysis and the result articulated by the Court of Appeals for the Seventh Circuit in Lakeside Bridge & Steel Company v. Mountain State Construction Company, 597 F.2d 596 (7th Cir.1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980), compel a finding of lack of personal jurisdiction under the particular circumstances of this lawsuit.

By its responsive memorandum of November 8, 1983, the plaintiff contends that the propriety of this Court's exercise of personal jurisdiction is plainly established under both the relevant provisions of Wisconsin's long-arm statute, Wis.Stat. § 801.05(5) (1977), and generally-accepted constitutional principles as applied to the particular facts of this case. As to the former, the plaintiff argues that, pursuant to the unequivocal terms of the parties' contract, the defendant engaged in a "single act" that effectively makes him subject to the jurisdiction of the courts of this state. Wis.Stat. § 801.05(5) (1977). Observing that compliance with the statutory requirements for the exercise of personal jurisdiction under Wis.Stat. § 801.05(5) gives rise to a presumption that constitutional due process considerations have likewise been satisfied, the plaintiff nonetheless characterizes the defendant's contacts with the State of Wisconsin as sufficient to meet any constitutional challenge to the exercise of jurisdiction over this nonresident party.

Those contacts are clearly established by the very nature of the continuing relationship envisioned by the contract between the parties, pursuant to which all significant developments in the project were to be accomplished in Wisconsin, and, significantly, by the appearance in the state of one of the defendant's representatives for the purpose of exhibition and presentation of the chemical formula, or so the argument goes. Citing Wisconsin Electrical Manufacturing Company v. Pennant Products, Inc., 619 F.2d 676 (7th Cir.1980), the plaintiff contends that dismissal of the complaint would prove wholly unjustified under these facts and that the authority cited by the defendant in support of his position is entirely distinguishable.

Predictably, the movant argues in reply that the circumstances under which one of his representatives appeared in the state do not support the exercise of personal jurisdiction; that the nature of the continuing, contractual relationship between the parties, including the exchange of telephone calls and correspondence in interstate commerce, does not satisfy the requirements of due process as established by the Fourteenth Amendment to the United States Constitution; and that it is the caselaw invoked by the plaintiff that is, in fact, inapposite.

In the midst of the parties' briefing of the motion to dismiss, the plaintiff, on July 27, 1983, moved to remand this action to the state court in which it was initiated, pursuant to 28 U.S.C. § 1447(c). In support of its petition, the plaintiff explains that this lawsuit was commenced on April 28, 1983, that personal service on the defendant was unsuccessfully attempted through a process server in the State of Michigan, but that service was eventually accomplished by mailing the summons and complaint to the defendant on June 9, 1983, and publishing the summons as a Class 3 notice in The Detroit Legal News on June 15, June 22, & June 29, 1983. The plaintiff further recounts the nature of a conversation its attorney had with defense counsel on June 21, 1983, during the course of which counsel indicated that his client had received the summons and complaint. Invoking the unequivocal requirement of 28 U.S.C. § 1446(b) that a petition for removal from state to federal court must be filed within 30 days after receipt of those documents, the movant observes, first, that the present petition was filed some 39 days after the summons and complaint were mailed on June 9, 1983, and, second, that those materials were presumptively received by the defendant three days thereafter. It is the plaintiff's final position that unless the defendant can demonstrate receipt of process on or after June 18, 1983, the petition for removal must be dismissed as untimely and the case remanded back to the Wisconsin Circuit Court for Milwaukee County.

By its responsive brief of November 3, 1983, the defendant maintains simply that he did, in fact, receive the summons and complaint in this action on June 18, 1983, nine days after mailing. In this context, the defendant further disputes the movant's description of presumptive receipt within three days as unsupported in the relevant, federal procedural law. The defendant concludes simply that remand would be inappropriate since the removal petition was, indeed, filed with the federal district court within thirty days of receipt of process, as prescribed by 28 U.S.C. § 1446(b).

Because the Court views the plaintiff's challenge to the propriety of removal as a threshold jurisdictional matter, the Court will dispose of it prior to addressing the merits of the parties' opposing positions with respect to the exercise of personal jurisdiction over the nonresident defendant.

THE PLAINTIFF'S MOTION TO REMAND PURSUANT TO 28 U.S.C. § 1447(c)

As both parties to this action recognize, the federal trial court is empowered to remand any matter to the state court from which it was removed "if at...