Wright Intern. Exp., Inc. v. Roger Dean Chevrolet

• Decision Date: 27 May 1988
• Docket Number: No. C-1-87-902.,C-1-87-902.
• Citation: 689 F. Supp. 788
• Parties: WRIGHT INTERNATIONAL EXPRESS, INC., Plaintiff, v. ROGER DEAN CHEVROLET, INC., d/b/a Aero Exchange Corp., Defendant.
• Court: U.S. District Court — Southern District of Ohio

689 F. Supp. 788

WRIGHT INTERNATIONAL EXPRESS, INC., Plaintiff, v. ROGER DEAN CHEVROLET, INC., d/b/a Aero Exchange Corp., Defendant.

No. C-1-87-902.

United States District Court, S.D. Ohio, W.D.

May 27, 1988.

Roger W. Healey, Cincinnati, Ohio, for plaintiff.

Thomas R. Sant, John J. Cruze, Cincinnati, Ohio, for defendant; Richard M. Goldstein, Miami, Fla., of counsel.

ORDER

HERMAN J. WEBER, District Judge.

This matter is before the Court upon the Report and Recommendation of the United States Magistrate (doc. no. 14) granting defendant's Motion to Dismiss (doc. no. 5) and the memoranda of the parties filed relating thereto. Defendant moves, pursuant to Fed.R.Civ.P. 12(b), for a dismissal of plaintiff's Complaint for lack of In Personam Jurisdiction.

In order for this Court to exercise personal jurisdiction over the defendant, there must be notice to the defendant, a constitutionally sufficient nexus between the defendant and the forum, and a basis for the defendant's amenability to service of summons. The basis for amenability to service, absent consent, means there must be authorization for service of summons on the defendant. This authorization is covered generally by Rule 4 of the Federal Rules of Civil Procedure. See Omni Capital International v. Rudolph Wolff & Co., Ltd., ___ U.S. ___, 108 S.Ct. 404, 409-410, 98 L.Ed.2d 415 (1987).

The burden of proving in personam jurisdiction, once it has been challenged, is on the plaintiff. Armbruster v. Quinn, 711 F.2d 1332, 1335 (6th Cir.1983). If the Court relies solely on the written materials submitted by the parties in making a pretrial determination, plaintiff need only establish a prima facie case of jurisdiction by demonstrating facts sufficient to support a finding of jurisdiction in order to avoid dismissal. Id. The Court must consider the pleadings and affidavits in the light most favorable to plaintiff. Id.

There are no material disputed facts underlying the issue of jurisdiction in this case and no issue of credibility. The Court has considered the Report and Recommendation of the Magistrate and the written materials submitted by the parties in rendering a determination on defendant's Motion to Dismiss.

As this case involves an out-of-state defendant, Federal Rule of Civil Procedure 4(e) provides the requisite authorization. Rule 4(e) provides:

Whenever a statute of the United States or an order of court thereunder provides for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state in which the district court is held, service may be made under the circumstances and in the manner prescribed by the statute or order, or, if there is no provision therein prescribing the manner of service, in a manner stated in this rule. Whenever a statute or rule of court of the state in which the district court is held provides ... for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state ... service may ... be made under the circumstances and in the manner prescribed in the statute or rule.

Thus, under Rule 4(e), the Court in this case must look to the long-arm statute of the State of Ohio to determine whether the defendant is amenable to service to warrant the exercise of personal jurisdiction. Ohio's long-arm statute, Ohio Rev. Code § 2307.38.2 provides in pertinent part 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; ...

One has transacted business in Ohio when the obligations created by a defendant or by business operations set in motion by the defendant have a realistic impact on the commerce of this state. Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 382-83 (6th Cir.1968). The Court may apply subsection (A)(1) to a single act of a defendant committed within or affecting Ohio. Id.

In order to ascertain whether the exercise of jurisdiction is proper under the Ohio statute, the Court must determine: 1) whether the exercise of in personam jurisdiction is permitted under the state statute, and 2) if so, whether the extension of such jurisdiction violates notions of fair play encompassed by the Due Process Clause of the fourteenth amendment. In-Flight Devices Corp., 466 F.2d 220, 224; Armbruster, 711 F.2d at 1335. Where the state long-arm statute has been interpreted by the Courts to be as broad as the limits of the Due Process Clause, the question of how far a state intended to extend the reach of its jurisdiction merges into the single question of whether the exercise of jurisdiction is constitutional. First National Bank, etc. v. J.W. Brewer Tire Co., 680 F.2d 1123 (6th Cir.1982).

It is well established in the Sixth Circuit that this section of the Ohio long-arm statute has extended the in personam jurisdiction of courts which sit in Ohio to its constitutional limits. In-Flight Devices Corp., 466 F.2d at 224; Armbruster, 711 F.2d at 1335. Thus, the sole question becomes whether this Court may constitutionally exercise in personam jurisdiction over a particular defendant under Ohio's long-arm statute.

Where the Court's jurisdiction is predicated upon a single act of a defendant, the Court must undertake a three-fold analysis: 1) Has defendant purposefully availed itself of the privilege of acting in the forum state or causing a consequence in the forum state?, 2) did the cause of action arise from defendant's actions there?, and 3) did the acts of defendant have a sufficiently substantial connection with the forum state to make the exercise of jurisdiction over defendant reasonable? Southern Machine Co., 401 F.2d at 381; In-Flight Devices Corp., 466 F.2d at 220; Nat'l. Can Corp. v. K Beverage Co., 674 F.2d 1134, 1137-38 (6th Cir.1982).

The first requirement protects a foreign defendant from the jurisdiction of a forum state which might result from the plaintiff's unilateral activity. In-Flight Devices Corp., 466 F.2d at 226. It insures that the defendant has become involved in the forum state through actions freely and intentionally undertaken by the defendant and prohibits jurisdiction where all contacts with a state result entirely from decisions made by the plaintiff. Southern Machine Co., 401 F.2d at 382-383. The intentional act of entering into a contractual relationship with a resident of Ohio is sufficient to meet the purposeful action requirement. Id. One's acts become purposeful if one should have reasonably foreseen that a transaction would have consequences in the forum state. Southern Machine Co., 401 F.2d at 383. A party to a contract may be held to have reasonably been able to foresee such consequences when that party knows that the other party to the contract is a resident of Ohio. See Garrett v. Ruth Originals, 456 F.Supp. 376 (S.D.Ohio 1978). Entering into a contract with an Ohio resident satisfies the first requirement.

The second requirement, that the cause of action arises out of a defendant's actions in this state is satisfied when the defendant breaches a contract. In such a case, the breach of the contract entered into with an Ohio resident is the event which does the damage within Ohio and satisfies this requirement. In-Flight Devices Corp., 466 F.2d at 229. In addition, in this case, defendant notified plaintiff in Ohio of the termination of the contract. This early termination is claimed to be one of the breaches of the contract.

Where the first two prongs of the test are met an inference arises that the third element, fairness, is also present. First National Bank, etc. v. J.W. Brewer Tire Co., 680 F.2d at 1126, citing, Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d at 381. Only in an unusual case will the third criterion not be found when the first two criteria are met. Id. This final criterion incorporates the flexibility of the test of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), which requires that one may be subject to in personam jurisdiction only if minimum contacts with the forum state are present so that maintenance of the suit does not offend traditional notions of fair play and substantial justice. In-Flight Devices Corp., 466 F.2d at 232.

The factors to be considered in determining whether the third prong of the test is met include whether the individual defendant should foresee the possibility of a foreign suit. World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980); In-Flight Devices Corp., 466 F.2d at 233; First Nat'l. Bank, etc. v. J.W. Brewer Tire Co. 680 F.2d at 1123. Where the non-resident party has physical contact with Ohio, a contract with a resident of Ohio by a non-resident defendant is evidence of the latter's expectation that it may be involved in litigation in Ohio. In-Flight Devices Corp., 466 F.2d at 234. An additional factor is the nature and quantity of the physical contacts with the forum state. Id. at 235. This factor is important to gauge the significance the parties attach to events occurring in Ohio, and to determine their expectations. Id. Physical entry into the state generally establishes that the parties considered events occurring within Ohio to be significant, however, letters or phone calls to Ohio also are indicative of substantial involvement with this state. Id.

Another factor to be considered is whether the plaintiff was passive or whether it actively participated in the transaction in question. First Nat'l. Bank, etc. v. J.W. Brewer Tire Co., 680 F.2d at 1123; In-Flight Devices Corp., 466 F.2d at 234. A further aspect of the fairness consideration is the extent of Ohio's interest in the controversy. In-Flight Devices Corp., at 232. Ohio has an interest in resolving suits brought by one of its...