W. Clay Jackson Enterprises, Inc. v. GREYHOUND LEASING AND FINANCIAL CORP., Civ. No. 75-786.

• Decision Date: 19 May 1977
• Docket Number: Civ. No. 75-786.
• Citation: 431 F. Supp. 1229
• Parties: W. CLAY JACKSON ENTERPRISES, INC., Flexicore of Puerto Rico, Inc., Carolina Dredging Corporation, W. Clay Jackson, Hilda Jackson, Thomas Box, and Robert S. Griggs, Plaintiffs, v. GREYHOUND LEASING AND FINANCIAL CORPORATION, the Greyhound Corporation, and the Home Insurance Company, Defendants.
• Court: U.S. District Court — District of Puerto Rico

431 F. Supp. 1229

W. CLAY JACKSON ENTERPRISES, INC., Flexicore of Puerto Rico, Inc., Carolina Dredging Corporation, W. Clay Jackson, Hilda Jackson, Thomas Box, and Robert S. Griggs, Plaintiffs, v. GREYHOUND LEASING AND FINANCIAL CORPORATION, the Greyhound Corporation, and the Home Insurance Company, Defendants.

Civ. No. 75-786.

United States District Court, D. Puerto Rico.

May 19, 1977.

Manuel Moreda Toledo, Agrait, Otero & Oliveras, Wallace Gonzalez-Oliver, San Juan, P.R., Gonzalez & Torres, Santurce, P.R., for plaintiffs.

Roberto Boneta, Francis & Doval, San Juan, P.R., for defendants.

OPINION AND ORDER

TORRUELLA, District Judge.

This matter is now before the Court upon a duly opposed Motion to Dismiss for lack of in personam jurisdiction filed by Codefendants Greyhound Leasing and Financial Corporation ("Greyhound Leasing") and Greyhound Corporation ("Greyhound"). Several exhibits together with extensive memoranda have also been filed by the parties in support of their respective positions.

This is an action for damages based upon the allegedly wrongful attachments levied upon Plaintiffs' assets by the concerted actions of Codefendants Greyhound Leasing and Greyhound during a litigation prosecuted in the Superior Court of the Commonwealth of Puerto Rico by Greyhound's alleged agent and alter-ego subsidiary Boothe Leasing Corporation of Puerto Rico ("Boothe Leasing"), a corporation which is presently inactive and not a party to this action. The Home Insurance Company has also been joined as Codefendant as the issuer of the attachment bond covering the aforesaid litigation. The jurisdiction of this Court is invoked pursuant to the provisions of 28 U.S.C. § 1332.

The movants have been served with process in accordance with Puerto Rico's Long Arm Statute (Rule 4.7 of the Rules of Civil Procedure of Puerto Rico, 32 L.P.R.A.Appendix) which provides as follows:

"... Where the person to be served is not within Puerto Rico, the General Court of Justice of Puerto Rico shall have personal jurisdiction over said nonresident as if he were a resident of the Commonwealth of Puerto Rico, if the action or claim arises as a result of the following:

"(1) Such person or his agent carries out business transactions within Puerto Rico, or

"(2) Executes by himself or through his agent, tortious acts within Puerto Rico." (Emphasis Supplied).

At this juncture, we should point out that this Rule was amended by the Commonwealth "... to incorporate to our procedural law the modern tendency which is to extend the jurisdiction of the state courts over nonresidents in the forum." Legislature of Puerto Rico, Journal of Proceedings, 1784 (1965); also see: Medina v. Superior Court, 177 C.A. 1975 (November 6, 1975); Integrated Ind. Inc. v. Continental Mill Co., 385 F.Supp. 883 (D.C.P.R., 1974).

The movants contend that Plaintiffs have not complied with the requirements of this Statute because Greyhound Leasing and Greyhound have not had the necessary minimum contacts with this forum. Hence, the proposition is advanced that said Codefendants are beyond the personal jurisdiction of this Court and that the causes of action filed against them should be dismissed.

The precise issue before us is whether the statute in question is applicable to the circumstances of this case. This inquiry is dual, since the question whether the assertion of jurisdiction comports with the Federal Constitution is to be decided under federal law, while the scope of the local statute is a matter of state law. Waltham Precision Instrument Co. v. McDonnell Air. Corp., 310 F.2d 20 (C.A. 1, 1962).

A threshold question is presented by Plaintiffs' proposition that long arm derivative jurisdiction over a foreign corporation arises when the parent corporation (i. e., Greyhound Leasing) so controls and dominates the activities of its resident subsidiary (i. e., Boothe Leasing), that the latter's separate corporate existence is in effect disregarded by the parent. It is contended that the exercise of such control and dominion over Boothe Leasing converts said corporation into a mere instrumentality or adjunct of Greyhound Leasing which justifies the piercing of the corporate veil in order to hold Greyhound Leasing responsible for the torts of its subsidiary.

This case abounds with instances evincive of the close control and supervision which Greyhound Leasing exercised over the affairs of its subsidiary: Greyhound Leasing owns 100% of the stock of Boothe Leasing; there are common directors and officers in both corporations; Boothe Leasing never had a business office in Puerto Rico nor an independent and separate business office at the parent's headquarters; Greyhound Leasing paid a substantial amount of the attorney's fees in Boothe Leasing's litigations; Boothe Leasing never paid dividends to Greyhound Leasing, its sole stockholder; Greyhound Leasing controlled and supervised the disposition of Boothe Leasing's leasing equipment and understood it to be its own (see Exhibits 13, 14, 15); the monthly rentals derived from Boothe Leasing's leases were deposited in Greyhound Leasing's bank account (see Exhibits 29, 30, 31, 32 and 34), and the parent closely supervised those deposits (Block 2, Exhibit 12); Boothe Leasing's income statements were consolidated with Greyhound Leasing's.

A careful evaluation of these factors clearly demonstrates the high degree of supervision and control which Greyhound Leasing exercised over the activities of Boothe Leasing and that the latter was but a mere alter ego of the former.

When viewed in their totality, the circumstances in this case point towards the existence of an agent, not of a principal, for purposes of long arm jurisdiction.¹ See, Eddie Dassin, Inc. v. Darlene Knitwear, Inc., 387 F.Supp. 958 (D.C.P.R.1974); Volkswagen Intermericana S.A. v. Rohlsen, 360 F.2d 437 (C.A. 1, 1966); Ruiz v. Economics Laboratory, Inc., 290 F.Supp. 701 (D.C.P.R., 1968); Fisher v. First Nat. Bank, 338 F.Supp. 525, 529 (S.D.Iowa, 1972), appeal dismissed, 466 F.2d 511 (C.A. 8, 1972); Tokyo Beoki (U.S.A.), Inc. v. S.S. Navarino, 324 F.Supp. 361 (S.D.N.Y., 1971).

However, we need not explore this question in detail, inasmuch as there is a more important basis under which jurisdiction over both Codefendants must be assumed. Codefendants have been brought to suit under the "tortious act" provision of Rule 4.7. The Complaint herein recites:

"On or about August, 1966, codefendants Greyhound and Greyhound Leasing conspiring among themselves and with Boothe Leasing Corporation of Puerto Rico, a Puerto Rican Corporation which was a wholly owned subsidiary of Greyhound Leasing and acting jointly, knowingly, willfully, wrongfully and in concert among themselves and with the said Boothe Leasing with the purpose of causing the wrongful attachment of assets of Plaintiffs in Puerto Rico . . . took and caused all the actions hereinafter set forth . . ." (Emphasis added).

Plaintiffs argue that both Greyhound Leasing and Greyhound are joint tortfeasors in the wrongful attachments alleged in this action. In this context, we find that Plaintiffs have made a sufficient showing of the supervisory role performed by Greyhound Leasing over the litigation wherein the attachments giving rise to this action were executed. There is a letter from Juan F. Doval, Esq., to M. G. Roth, Vice-President of Greyhound Leasing in Arizona, informing him about the progress of the litigation and expressing that "as soon as Clay Jackson gives us an offer of settlement we will submit it to you." (Exhibit 37). There is also a letter from Joseph Novak, Esq., to John A. Dustin, of Greyhound Leasing requesting that some of the items attached be released in exchange for the placing of a chattel mortgage thereon. (Exhibit 39). This letter was subsequently answered by Raymond S. Saint on the stationery of Greyhound Leasing, stating that there would be no releases of the attached equipment except pursuant to an agreeable settlement. (Exhibit 40). We also note a report addressed to John A. Dustin of Greyhound Leasing concerning the equipment object of the attachment (Exhibit 42), as well as a letter from the Vice-President of Boothe Leasing to Greyhound Leasing in California, enclosing his personal invoice for the time expended in the personal inspection of the attached equipment (Exhibit 43).

The foregoing reveals the extent of Greyhound Leasing's decisional power and particular interest in the events that stemmed from the suit formally initiated by its wholly owned subsidiary against Plaintiffs herein.² In evaluating the effect of said control and active participation upon the matter now before the Court, we must keep in mind that a joint tort-feasor relationship exists when the injuries claimed arise out of the combined or concurrent wrongful actions of two or more persons. See Garcia v. Government of the Capital, 72 P.R.R. 133 (1951); Morales v. Castro, 85 P.R.R. 275, 282 (1962); Prado v. Quiñones, 78 P.R.R. 309, 330-331 (1955). Clearly, the circumstances summarized above are sufficiently revelative of such a relationship for purposes of the instant Motion. Therefore, and without intimating any view on the ultimate merits of this case, we are bound to assume jurisdiction over Greyhound Leasing. See Prosser, The Law of Torts, Sec. 46, pp. 291-292 (4th ed. 1971).

Codefendants claim that the alleged wrongful conduct, having taken place outside the Commonwealth, cannot form the basis of jurisdiction even when the injury has been felt within Puerto Rico. The case of A. H. Thomas Co. v. Tribunal Superior, 98 P.R.R. 864 (1970) is cited in support of this view.

After a careful reading of the decision in A. H. Thomas, supra, we find it is not controlling. That case involved a claim for personal injuries sustained by a chemistry student when a glass tube broke and cut some tendons of her right hand. An action was instituted against the University of Puerto Rico and its insurer. Thereafter, a...