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CONTROLLED METALS, INC. v. NON-FERROUS INTL. CORP.

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


March 24, 1976

CONTROLLED METALS, INC.
v.
NON-FERROUS INTERNATIONAL CORPORATION

The opinion of the court was delivered by: MCGLYNN

MEMORANDUM

 McGLYNN, District Judge.

 Plaintiff instituted this contract action in the Court of Common Pleas of Bucks County, Pennsylvania, alleging an oral contract for the sale of condenser tubing and seeking damages for the alleged breach thereof by the defendant. Defendant is a New York Corporation with its principal place of business in New York. Plaintiff alleged, however, that defendant was doing business in Pennsylvania and relied on the provisions of the Pennsylvania long-arm statute, 42 P.S. § 8301 et seq. to invoke the jurisdiction of the Pennsylvania court.

 Defendant removed the case here under the provisions of 28 U.S.C. § 1441 *fn1" and then filed a motion to dismiss asserting that this Court does not have in personam jurisdiction over the defendant and that the complaint fails to state a claim upon which relief can be granted. *fn2" For the reasons hereinafter stated, we deny defendant's motion.

 I

 With regard to the jurisdictional question, we look to Pennsylvania's long-arm statute *fn3" and specifically Section 8302 which pertains to non-qualified foreign corporations. *fn4" A precondition to the exercise of in personam jurisdiction over the defendant is a finding either that its activities meet one of the criteria prescribed by section 8309(a) as "doing business" *fn5" or, that the defendant had such "minimum contacts" with Pennsylvania that maintenance of this suit would not offend due process. *fn6" See International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95, 101 (1945), McGee v. International Life Ins. Co., 355 U.S. 220, 222-223, 78 S. Ct. 199, 200-201, 2 L. Ed. 2d 223, 226 (1957), Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1239, 2 L. Ed. 2d 1283, 1297 (1958) and Columbia Metal Culvert Co., Inc. v. Kaiser Industries Corp. et al., 526 F.2d 724 (3d Cir. 1975).

 A finding of minimum contacts in the constitutional sense is sufficient to sustain in personam jurisdiction under the law of Pennsylvania. Orefice v. Laurelview Convalescent Center, Inc., 66 F.R.D. 136, 141 (E.D.Pa.1975), H. Alpers and Associates v. Omega Precision Hand Tools, Inc., 62 F.R.D. 408, 410-411 & n. 3 (E.D.Pa.1974), Proctor & Schwartz, Inc. v. Cleveland Lumber Co., 228 Pa.Super. 12, 323 A.2d 11, 14 (1974).

 In the context of this case, the issue boils down to whether a series of telephone communications between an out-of-state buyer and an in-state seller and the delivery by mail to the seller of shipping paraphernalia represents "minimum contacts".

 According to the affidavit of plaintiff's agent, Robert J. Mc Van, this episode began on May 28, 1975 when Paul Gartlan, representing the defendant, telephoned Mc Van requesting price information for condenser tubing. *fn7" Mc Van was working as a desk salesman at plaintiff's business location in Warrington, Pennsylvania. Mc Van provided the information to Gartlan by telephone the next day. Later on the 29th, Gartlan placed an order through Mc Van over the telephone. After contacting plaintiff's supplier, Mc Van again called Gartlan confirming the terms of the order over the telephone. *fn8"

 On June 2, 1975, plaintiff received a package from defendant containing packing lists, bills of lading and packing slips bearing defendant's letterhead. These items were sent (a common practice according to Mc Van) in order for plaintiff to ship the tubing in defendant's name. Also on the 2nd, Gartlan telephoned Mc Van to inquire whether the tubing had been cut to conform to defendant's order specifications. Mc Van informed Gartlan, after first checking with the supplier, that the tubing was cut to defendant's specifications and was ready for shipment on the 3rd of June. According to Mc Van, Gartlan then requested that the shipment be delayed.

 The next day, June 3rd, Gartlan telephoned Mc Van and informed him that defendant's customer had cancelled its order with the defendant. Gartlan requested that Mc Van try to lower the price of the tubing. Mc Van telephoned Gartlan the following day and gave him a revised price. On the 5th of June, plaintiff invoiced defendant at the revised price. Thereafter, during the weeks of June 9 and June 16, 1975, Mc Van and Gartlan attempted to negotiate a new price without success. On June 25, 1975, plaintiff received in the mail a copy of its original invoice that had been sent to defendant and, also, a memo from Gartlan on behalf of the defendant advising of the return of the invoice. Plaintiff contends that this action represents a breach of the alleged agreement. *fn9"

 The affidavit of Harold Ames, President of defendant, sets forth the following: defendant's only place of business is in New York. As for Pennsylvania, it conducts no business there, has no bank accounts, no mailing address, no telephone listing, no business facility, no employees and neither executes nor performs any contracts or sales in Pennsylvania. *fn10"

 The test for minimum contacts is neither a simple quantitative analysis nor a qualitative review of the activity of the defendant, but rather a combination *fn11" which includes not only the conduct but the expectations of the parties. Campbell v. Triangle Corp., 336 F. Supp. 1002, 1007, (E.D.Pa.1972); and Proctor & Schwartz, supra, 323 A.2d at 15.

 The affidavits illustrate that defendant's agent, though never within the Commonwealth, had telephone contacts with plaintiff's agent out of which the purported agreement was formed. Since acceptance of defendant's offer to buy was made by plaintiff's agent in Pennsylvania and, since performance was to take place within Pennsylvania, the agreement must be considered a Pennsylvania contract. See Inpaco, Inc. v. Mc Donald's Corp., 413 F. Supp. 415, 418 n. 3 (E.D.Pa. 1976), citing Millar Bros. & Co. v. Armour and Co., 144 F. Supp. 857, 859 (E.D.Pa.1956).

 A contractual obligation is a sufficient basis for a finding that a corporation had purposefully availed itself of the privilege of acting within the Commonwealth. See Proctor & Schwartz, supra, at 15. Here, as in Proctor & Schwartz and Inpaco, Inc. v. Mc Donald's Corp., supra, the agreement entered into by defendant has "a realistic economic impact on the commerce of this Commonwealth" 323 A.2d at 15, and, in addition, this cause of action arises directly from the contacts between the plaintiff and defendant. See Trachtman v. T. M. S. Realty And Financial Services, 393 F. Supp. 1342, 1345 (E.D.Pa. 1975).

 As the Court concluded in Proctor & Schwartz, supra, 323 A.2d at 15-16:

 

The entering into commercial obligations and the breach of those obligations in the forum state provides the necessary jurisdictional relationship.

 With regard to the second part of the twofold inquiry, it appears that the maintenance of this suit is fair and reasonable. Defendant initiated the communications that led to the agreement. Further, defendant mailed shipping materials to the plaintiff demonstrating a recognition of plaintiff's obligation as well as an expectation of performance. Moreover, defendant's agent attempted to re-negotiate the terms providing added weight to the belief that defendant recognized the existence of a contractual obligation. Such conduct evidences defendant's active role in dealing with plaintiff. Defendant was not a "passive purchaser" by any means. *fn12" The facts here are not at all similar to those presented in Hanson v. Denckla, supra, where the Court stated that the "unilateral activity of those who claim some relationship with a non-resident defendant cannot satisfy the requirement of contact with the forum state." *fn13" Here the defendant had contact with the forum state and cannot reasonably assert that the exercise of jurisdiction over it would go beyond its expectations. *fn14" Since the agreement was to be performed in Pennsylvania, defendant should have anticipated that a breach of the agreement on its part would have consequences in this state. The purpose of Pennsylvania's long-arm statute is to provide "an appropriate forum for citizens to seek redress for harm caused by foreign corporations which have availed themselves of the privilege of 'doing business' in the Commonwealth." *fn15" Pennsylvania has an interest in protecting a resident by asserting jurisdiction over a foreign corporation whose contact with the state caused damage to the Pennsylvania resident. *fn16"

 Since "very minimal contacts are required to satisfy due process, particularly in the jurisdictional context", Columbia Metal Culvert Co., Inc. v. Kaiser Industries Corp., 526 F.2d 724, 730 (3d Cir. 1975), we are satisfied that under the facts of this case, the Court has jurisdiction over the person of the defendant.

 II

 As for defendant's motion to dismiss the complaint for failure to state a claim upon which relief can be granted, it is evident from the foregoing discussion that plaintiff has alleged a valid claim based on a breach of contract and, accordingly, the motion based on this ground will also be denied. See United States ex rel. Tyrrell v. Speaker, 471 F.2d 1197, 1200 (3d Cir. 1973).


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