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CAMPBELL v. TRIANGLE CORP.

January 27, 1972

Russell O. CAMPBELL, Plaintiff,
v.
The TRIANGLE CORPORATION, a Delaware corporation, and Century Tool Company, Inc., a Delaware corporation, Defendants


Joseph S. Lord, III, Chief Judge.


The opinion of the court was delivered by: LORD, III

JOSEPH S. LORD, III, Chief Judge.

 Plaintiff, a citizen of Pennsylvania, has brought this action for breach of contract and fraudulent inducement against Triangle Corporation ("Triangle") and Century Tool Company, Inc. ("Century"), both Delaware corporations. Century has its principal place of business in Pendel, Pennsylvania, while Triangle has its principal offices in Orangeburg, South Carolina.

 Plaintiff alleges that as a member of a management group employed by Century Tool Company, Inc., a New Jersey corporation, Century Tool Company Contract Division, a New Jersey corporation, and Custom Tool Company, Inc., a Pennsylvania corporation, he was a party to an agreement entered into with Fred T. and Betty L. Ueltzen on November 1, 1966 for the purchase of the outstanding capital of the three corporations which was owned by the Ueltzens. On March 12, 1968, plaintiff, as a member of the management group, and the Ueltzens entered into an agreement with Triangle in which Triangle agreed to purchase all the assets of the three corporations through a subsidiary (Century) which was to be formed. Plaintiff alleges that consideration to the management group for the purchase was the issuance of warrants to purchase the common stock of Triangle and five year employment agreements to be entered into by Triangle through its subsidiary. On March 16, 1968, plaintiff and other members of the management group entered into a further agreement which rescinded and cancelled the stock purchase agreement of November 1, 1966 with the Ueltzens. Plaintiff claims that he never received the stock warrants or entered into a five year employment contract with Triangle or Century and that his employment was terminated by Century as of January 1, 1970. Plaintiff seeks damages against Triangle and Century for breach of contract and for fraudulently inducing plaintiff to rescind the November 1, 1966 stock purchase agreement and to continue in the employ of Century.

 Defendants have moved to dismiss on the grounds that: (1) the requisite diversity of citizenship between plaintiff and defendants does not exist; (2) Triangle was not properly served with process and the court lacks jurisdiction over its person; and (3) Triangle conducts no business activity within Pennsylvania and therefore venue is improper.

 I.

 Plaintiff asserts jurisdiction under 28 U.S.C. § 1332 which provides in pertinent part:

 
"(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and is between --
 
(1) citizens of different States; * * *."

 This provision has been interpreted to require complete diversity between all plaintiffs and all defendants, i.e. each plaintiff must be able to sue each defendant. Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L. Ed. 435 (1806). Section 1332(c) provides that a corporation is to be considered a citizen of

 
"* * * any State by which it has been incorporated and of the State where it has its principal place of business."

 Century has its principal place of business in Pennsylvania and is therefore a citizen of Pennsylvania for purposes of determining diversity jurisdiction. Because plaintiff is also a citizen of Pennsylvania, complete diversity does not exist between plaintiff and all defendants.

 Plaintiff seeks to avoid dismissal for lack of subject matter jurisdiction by asserting that the court can and should exercise pendent jurisdiction over the claim against Century. The doctrine of pendent jurisdiction was recognized by the Supreme Court in Hurn v. Oursler, 289 U.S. 238, 53 S. Ct. 586, 77 L. Ed. 1148 (1938) and was recently defined by the Court in United Mine Workers v. Gibbs, 383 U.S. 715, 725-726, 86 S. Ct. 1130, 1138, 16 L. Ed. 2d 218 (1966) as follows

 
"* * * Pendent jurisdiction, in the sense of judicial power, exists whenever there is a claim 'arising under [the] Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority * * *,' U.S. Const., Art. III, § 2, and the relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional 'case.' The federal claim must have substance sufficient to confer subject matter jurisdiction on the court. * * * The state and federal claims must derive from a common nucleus of operative fact. But if, considered without regard to their federal or state character, a plaintiff's claims are such that ...

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