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FILSAM CORP. v. DYER

November 24, 1976

FILSAM CORPORATION
v.
NORMAN E. DYER



The opinion of the court was delivered by: BECKER

EDWARD R. BECKER, J.

 I. Preliminary Statement

 This case presents yet another of the myriad situations which test the intended scope of Pennsylvania's long-arm statute. *fn1" The underlying lawsuit is an action by a corporate owner of Pennsylvania real estate for alleged breach by a nonresident individual of an agreement to purchase that real estate. *fn2" The defendant, a Minnesota businessman and real estate investor, aside from attending an Eagles-Giants football game many years ago, has been in Pennsylvania only twice, once to inspect the real estate, which he intended to lease to third parties, and once to attend the (aborted) settlement.

 Long-arm jurisdiction is asserted to attach on several theories: (1) that defendant was doing business in Pennsylvania within the meaning of section 8309(a)(2) (doing of a single act with an intention to perform a series of such acts); (2) that defendant was doing business in Pennsylvania within the meaning of section 8309(a)(5) (ownership of real estate in Pennsylvania); and (3) that by refusing to conclude settlement, defendant, under section 8305, caused harm in Pennsylvania while acting outside the state. Plaintiff also advances the interesting proposition that section 8309(c), in specifically providing that foreign corporations which acquire mortgages and real estate for leasing are not "doing business," creates the inference that for those who are not foreign corporations such activity is "doing business."

 It is defendants' contention that he was not "doing business" under any of the terms of section 8309(a) of the Pennsylvania long-arm statute; that he did not, under section 8305, cause harm within the Commonwealth while acting outside it; and that, under the due process clause of the Fourteenth Amendment, he is not constitutionally subject to the exercise of in personam jurisdiction. In connection with these basic claims, defendant also asserts that, although he is an individual, he is entitled to the benefit of section 8309(c), which provides inter alia that as to foreign corporations the acquisition in Pennsylvania of mortgages and real estate for leasing is not "doing business." With respect to this last assertion, defendant submits that he is within the protection of 8309(c) by its own terms; *fn3" however, if such a construction is not reached, he contends that he is still entitled to the benefit of that section by virtue of the equal protection clause of the Fourteenth Amendment.

 The case is before us upon defendant's motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2), Fed.R.Civ.P. Before considering the merits of defendant's motion, it is, of course, necessary to review in some detail the factual record, which consists of the complaint itself, defendant's affidavit, and a supplementary letter from defendant's counsel. We turn now to this task, to be followed by a discussion of the applicable law. As will in due course appear, we are of the opinion that the exercise of personal jurisdiction under section 8309(a)(2) and (a)(5) is appropriate and does not offend the due process clause of the fourteenth amendment. Nor do we find any other obstacles to the use of those subsections. As will also appear, owing to the less than translucent nature of Pennsylvania's long-arm statute, some of the issues presented in this case are close and troublesome, hence the length of this opinion.

 In the fall of 1974, defendant Norman E. Dyer (Dyer), a resident of Minnesota, became interested in purchasing real estate in Philadelphia, Pennsylvania, for investment purposes. Dyer had had dealings with Midas International, Inc. (Midas), through its Chicago base of operations, and had discussed with Midas an arrangement by which Dyer would acquire premises suitable to Midas and then lease those premises to Midas for a period of years. Midas was particularly interested in a building owned by plaintiff Filsam Corporation (Filsam), which it called to Dyer's attention. *fn4" Dyer thereupon contacted Filsam, proposed purchase of the property, and entered into negotiations with Filsam's Pennsylvania agent.

 On October 3, 1974, Dyer made a written offer to purchase the property for $575,000, a price which was subsequently rejected. By October 29, Dyer and Midas had reached agreement on the basic terms of their lease. Dyer then telephoned an offer of $650,000 for the purchase of the Filsam property. Early in December, Dyer made his first entry into Pennsylvania in connection with the proposed real estate transaction. Accompanied by agents of Midas and Filsam, he viewed the property under discussion. Thereafter, Dyer converted his telephoned offer into a written one, and mailed it from Minnesota to Philadelphia where it was accepted by Filsam. One subsequent amendment pertaining to second mortgage financing through Filsam was signed by Filsam in Philadelphia and forwarded to Dyer in Minnesota for his signature. During the interim period Dyer negotiated with Pennsylvania lending institutions for at least some of the necessary financing.

 On April 15, 1975, Dyer again visited Pennsylvania in order to attend settlement. He refused to complete that settlement, however, asserting that Filsam had not made repairs to the property as required by the agreement of sale. Before returning to Minnesota, Dyer agreed to extend the settlement by ten days. On the day before that revised settlement date, a representative of Midas informed Dyer that Filsam had still failed to make the requisite repairs. Dyer thereupon refused to complete the transaction and this suit for breach of an agreement to purchase real estate followed. As noted in our preliminary statement, these were the only two times of significance that Dyer was ever in Pennsylvania.

 In addition to the above-described congeries of events, two other circumstances are pertinent to the jurisdictional issue before us. First, the lease agreement with Midas did not include all of the building to be purchased by Dyer. Indeed, only 50,000 square feet out of 110,000 square feet were leased to Midas. As stated in a letter from Dyer's counsel, Dyer would have attempted to lease the remaining space. Second, Dyer intended to maintain his ownership of the property as a continuous investment, although he did not expect to manage the property personally. *fn5" And while he made some attempt to form a corporation for this purpose, he acted as an individual throughout the dealings involved herein.

 III. Discussion

 Pennsylvania's long-arm statute offers a panoply of devices by which the assertion of in personam jurisdiction over a nonresident individual may be accomplished. We will consider separately those sections which have been fairly presented to us as a basis for jurisdiction, along with the related constitutional attacks.

 A. Doing Business: Section 8309(a)(2) ("Single Act . . . Series of Such Acts")

 Doing business in Pennsylvania by nonresident individuals is made the basis for personal jurisdiction by section 8304 of the Pennsylvania statute. Of more direct concern for present purposes, however, is section 8309(a) which attempts to define the term "doing business":

 
(a) General rule. -- Any of the following shall constitute "doing business" for the purposes of this chapter:
 
(1) The doing by any person in this Commonwealth of a series of similar acts for the purpose of thereby realizing pecuniary benefit or ...

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