Universal Coach, Inc. v. New York City Transit Auth., Inc.

• Decision Date: 13 September 1993
• Docket Number: No. 63590,63590
• Parties: UNIVERSAL COACH, INC. et al., Appellants, v. NEW YORK CITY TRANSIT AUTHORITY, INC. et al., Appellees.
• Court: Ohio Court of Appeals

Page 284

90 Ohio App.3d 284

629 N.E.2d 28

UNIVERSAL COACH, INC. et al., Appellants, v. NEW YORK CITY TRANSIT AUTHORITY, INC. et al., Appellees.

No. 63590.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

Decided Sept. 13, 1993.

Nicholas M. DeVito, Cleveland, for appellants.

Baker & Hostetler, H. Stephen Madsen, Wayne C. Dabb and R. Timothy Coerdt, Cleveland, for appellee.

Squire, Sanders & Dempsey, Eric M. Oakley and Jill G. Okun, Cleveland, for appellees Flxible Corp. and Gen. Auto. Corp.

Schuyler, Roche & Zwirner, Chicago, Michael B. Roche, and L. Andrew Brehm, Porter & Wright and Hugh E. McKay, Cleveland, for appellee Blitz Corp.

Jones, Day, Reavis & Pogue, and Robert P. Ducatman, Cleveland, for appellee New Jersey Transit.

ANN McMANAMON, Judge.

Universal Coach, Inc. and Udelsohn Equipment Company, Inc., timely appeal from a judgment of the Cuyahoga County Court of Common Pleas which granted summary judgment on behalf of New York City Transit Authority, Inc. ("NYCTA"), Flxible Corp. ("FLX"), General Automotive Corp. ("GAC"), Blitz Corp. and New Jersey Transit ("NJT"), pursuant to Civ.R. 56.

Our review compels modification in part and reversal in part.

In January 1985, NYCTA announced its intention to sell eight hundred thirty used Grumman buses and spare parts through a limited advertisement program in The New York Times, The Wall Street Journal, City Record, City Sun, American Metal Market, Iron Age and Passenger Transport. In the fall of 1985, Universal contacted NYCTA to express an interest in purchasing the buses and a series of negotiations ensued. During the process, Universal and Udelsohn formed a joint venture for the purpose of the purchase, remanufacture and resale of the buses.

A year later, Universal, Udelsohn and NYCTA entered into a purchase agreement for the sale. The agreement, however, provided that the transaction was conditioned upon the approval by the chairman of NYCTA, the New York State Department of Transportation, and the comptroller of the state of New York. The chairman of NYCTA refused this approval, thus preventing the proposed sale.

On June 30, 1989, Universal and Udelsohn filed a complaint in the Cuyahoga County Court of Common Pleas naming NYCTA, FLX, GAC, Blitz and NJT as defendants. The complaint principally alleged that these defendants had violated the Ohio Corrupt Activity Act ("RICO"), R.C. 2923.31 et seq., as a result of conduct which prevented the sale of the buses to the plaintiffs. In addition, the complaint raised claims of fraud, conspiracy, tortious interference with contract and bad faith/breach of contract.

In response to the complaint, NYCTA filed a motion to dismiss and/or motion for summary judgment based upon a lack of in personam jurisdiction per Civ.R. 12(B)(2) and failure to state a claim upon which relief can be granted per Civ.R. 12(B)(6). The remaining defendants filed motions to dismiss. On March 24, 1992, the trial court, after treating each motion to dismiss as a motion for summary judgment, granted summary judgment on behalf of each of the defendants.

The would-be purchasers, upon appeal, have raised two assignments of error which essentially argue that the trial court erred by granting the motions. Since the assignments of error have a common basis in law and fact, this court will consolidate them for review. ¹

We initially note that the record before this court fails to demonstrate that the trial court possessed in personam jurisdiction over NYCTA (Brooklyn, New York), GAC (Ann Arbor, Michigan), Blitz (Chicago, Illinois) and NJT (Newark, New Jersey). In order to invoke the in personam jurisdiction of the trial court over a foreign person or corporation, the plaintiff must demonstrate that (1) the nonresident person or corporation had "minimum contacts" with the forum state; and (2) out-of-state service of process does not offend traditional notions of fair play as mandated by the Fourteenth Amendment to the United States Constitution. Internatl. Shoe Co. v. Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. In addition, "there [must] be some act by which the defendant purposefully avails himself of the privilege of conducting activities within the forum state, thus, invoking the benefits and protections of its laws." Hanson v. Denckla (1958), 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283, 1295.

R.C. 2307.382, which sets forth the "minimum contacts" required in order to vest long-arm jurisdiction in a trial court over a foreign person or corporation, provides that:

"(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:

"(1) Transacting any business in this state;

"(2) Contracting to supply services or goods in this state "(3) Causing tortious injury by an act or omission in this state;

"(4) Causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;

"(5) Causing tortious injury in this state to any person by breach of warranty expressly or impliedly made in the sale of goods outside this state when he might reasonably have expected such person to use, consume, or be affected by the goods in this state, provided that he also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;

"(6) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state;

"(7) Causing tortious injury to any person by a criminal act, any element of which takes place in this state, which he commits or in the commission of which he is guilty of complicity;

"(8) Having an interest in, using, or possessing real property in this state;

"(9) Contracting to insure any person, property, or risk located within this state at the time of contracting."

In addition, Civ.R. 4.3(A), which describes the persons subject to long-arm jurisdiction and extraterritorial service of process, provides that:

"(A) When Service Permitted. Service of process may be made outside of this state, as provided herein, in any action in this state, upon a person who at the time of service of process is a nonresident of this state or is a resident of this state who is absent from this state. The term 'person' includes an individual, his executor, administrator, or other personal representative, or a corporation, partnership, association, or any other legal or commercial entity, who, acting directly or by an agent, has caused an event to occur out of which the claim which is the subject of the complaint arose, from the person's:

"(1) Transacting any business in this state;

"(2) Contracting to supply services or goods in this state;

"(3) Causing tortious injury by an act or omission in this state including but not limited to actions arising out of the ownership, operation or use of a motor vehicle or aircraft in this state;

"(4) Causing tortious injury in this state by an act or omission outside this state if he regularly does or solicits business, or engages in any other persistent course of conduct or derives substantial revenue from goods used or consumed or services rendered in this state;

"(5) Causing injury in this state to any person by breach of warranty expressly or impliedly made in the sale of goods outside this state when he might reasonably have expected such person to use, consume, or be affected by the goods in this state, provided that he also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;

"(6) Having an interest in, using, or possessing real property in this state;

"(7) Contracting to insure any person, property, or risk located within this state at the time of contracting;

"(8) Living in the marital relationship within this state notwithstanding subsequent departure from this state, as to all obligation arising for alimony, custody, child support, or property settlement, if the other party to the marital relationship continues to reside in this state."

We fail to find the existence of any ground, pursuant to R.C. 2307.382(A) or Civ.R. 4.3(A), which conferred personal jurisdiction over NYCTA, GAC, Blitz or NJT on the trial court. Not one of these defendants conducted business within the state of Ohio which related directly or indirectly to the claims of a RICO violation, fraud, conspiracy, tortious interference with contract and bad faith/breach of contract. Gen. Environmental Science Corp. v. Horsfall (N.D.Ohio 1990), 753 F.Supp. 664; Berning v. BBC, Inc. (S.D.Ohio 1983), 575 F.Supp. 1354. In addition, that record fails to disclose that (1) the defendants took advantage of the privileges and benefits of the state of Ohio; (2) the defendants actively solicited business within the state of Ohio; (3) it was foreseeable that the defendants would litigate within the state of Ohio; and (4) it was convenient to the litigants and fairness required the defendants to come to the state of Ohio. Sales Consultants v. Buehler Lumber Co. (1992), 79 Ohio App.3d 289, 607 N.E.2d 94; Erie Shore Indus., Inc. v. Cumberland Steel, Inc. (June 7, 1990), Cuyahoga App. No. 57053, unreported, 1990 WL 75221. See, also, Ohio State Tie & Timber, Inc. v. Paris Lumber Co. (1982), 8 Ohio App.3d 236, 8 OBR 309, 456 N.E.2d 1309; Culp v. Polytechnic Inst. of New York (1982), 7 Ohio App.3d 352, 7 OBR 451, 455 N.E.2d 698. As a result, the trial court did not possess in personam jurisdiction over NYCTA, GAC, Blitz and NJT and should have...