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WASHINGTON PETROLEUM & SUPPLY CO. v. GIRARD BANK

May 3, 1983

Washington Petroleum And Supply Company, Plaintiff
v.
Girard Bank, Federal Reserve Bank of Philadelphia, Federal Reserve Bank of New York, and Midlantic National Bank, Defendants


Richard P. Conaboy, United States District Judge.


The opinion of the court was delivered by: CONABOY

Richard P. Conaboy, United States District Judge

 The Plaintiff, Washington Petroleum and Supply Company, a New Jersey corporation, instituted this action against the four Defendant banking institutions *fn1" seeking damages for their alleged negligence in the handling of a check. The case was originally filed in the Court of Common Pleas of Monroe County *fn2" but, by petition dated November 22, 1982, was removed to this Court by the Defendant New York Fed. 28 U.S.C. § 1441 (b). Jurisdiction of the Court is asserted pursuant to 12 U.S.C. § 632 (1957) by reason of the presence of the two Federal Reserve banks as Defendants. Presently pending for the Court's consideration are two motions filed by the Defendant New York Fed. The first is a motion to dismiss the Complaint on the grounds that the Court lacks personal jurisdiction over it, Fed. R. Civ. P. 12 (b) (2) or, alternatively, that the Complaint fails to state a claim against it upon which relief can be granted. Fed. R. Civ. P. 12 (b) (6). The second is a motion to dismiss the cross-claims of the Defendants Girard Bank and Midlantic National Bank. For the reasons set forth herein, we will dismiss the Complaint as to Defendants New York Fed and Philadelphia Fed and remand this case back to the state court in which it was initially filed. In view of this remand, it is not necessary or appropriate for the Court to consider the New York Fed's motion to dismiss the cross-claims.

 I

 For purposes of our review of the Defendant New York Fed's motion to dismiss the Complaint, we must, of course, accept as true the factual allegations of the Plaintiff's pleadings. Warth v. Seldin, 422 U.S. 490, 501, 45 L. Ed. 2d 343, 95 S. Ct. 2197 (1975); see Sharpe v. Philadelphia Housing Authority, 693 F.2d 24, 25 (3d Cir. 1982). On February 17, 1982, a third-party, Master Mobile Mechanics, Inc., issued a check payable to the Plaintiff in the amount of $16,690.21. Complaint, para. 6. On that same day, Plaintiff deposited the check in its account in First Eastern Bank and the check was processed in a cash letter to Defendant Girard Bank. Id., PP 7-8. On February 18, 1982, Girard Bank sent the check to Midlantic National Bank as "Payor bank" in the Federal Reserve Collection System which, the next day, notified the New York Fed that the check was being dishonored for insufficient funds. Id., PP 9-10. On February 19, 1982, the New York Fed sent a wire notice of the dishonor to the Philadelphia Fed which, in turn, notified Girard Bank. Id., PP 11-12. On or about February 26, 1982, Girard Bank received the actual check from the Philadelphia Fed and forwarded it to First Eastern Bank. First Eastern Bank received it on March 1, 1982 and charged the Plaintiff's account for the amount of the check. On March 5, 1982, the Plaintiff received notice that the check was dishonored. Id., PP 13-15.

 In the present action, the Plaintiff contends that from February 17 until March 5, 1982, it continued to maintain Master Mobile Mechanics, Inc. on a consignment basis in reliance upon its ability to pay, since the check in question had never been returned. Id., P 16. As a result of the dishonor, the Plaintiff alleges it has suffered monetary losses in the amount of the check ($16,690.21), as well as lost additional consigned goods in the amount of $18,257.05. Count III of the Complaint alleges that the Defendant New York Fed failed to use ordinary care in the processing of the notice of dishonor it received from Midlantic National Bank on February 19, 1982, and in forwarding this notice to the next bank in the check collection process. Id., P 31.

 II

 We turn first to consider the Defendant New York Fed's motion to dismiss the Complaint against it on the basis of lack of personal jurisdiction. In opposing the present motion, the Plaintiff contends that this Court can assert in personam jurisdiction over the New York Fed pursuant to the Pennsylvania long-arm statute, 42 Pa. C.S.A. §§ 5301-5308 and §§ 5321-5322. Specifically, the Plaintiff relies upon sections 5322 (a) (1) and (4) *fn3" of that statute.

 At the outset, we note that since the Pennsylvania long-arm statute makes the exercise of jurisdiction over a nonresident co-extensive with the permissible limits of the due process clause of the Fourteenth Amendment, *fn4" our inquiry can be limited to deciding whether it would be a denial of due process to assert jurisdiction over the New York Fed. Koenig v. International Brotherhood of Boilermakers, 284 Pa. Super. 558, 567, 426 A.2d 635 (1980); Hart v. McCollum, 249 Pa Super. 267, 272, 376 A.2d 644 (1977); see Insurance Co. of North America v. Marina Salina Cruz, 649 F.2d 1266, 1269 (9th Cir. 1981); McCabe v. Kevin Jenkins and Associates, Inc., 531 F. Supp. 648, 649-50 (E.D. Pa 1982). In Reliance Steel Products v. Watson, Ess, Marshall & Enggas, 675 F.2d 587 (3d Cir. 1982), our Court of Appeals recently outlined a two-step process to be undertaken when considering this jurisdictional challenge:

 
The initial determination that must be made is whether the claim or cause of action which is being pursued arises from the defendant's forum related activities or from non-forum related activities. Schwilm v. Holbrook, 661 F.2d 12 (3rd Cir 1981). The focus must be on the relationship of the transaction giving rise to the law suit to the forum where the plaintiff seeks to litigate it. Paolino v. Channel Home Centers, Inc., 668 F.2d 721, 724 (3rd Cir. 1981).
 
If the claim pursued arises from forum related activity, the court must determine whether there are enough contacts with the forum arising out of that transaction in order to justify the assertion of jurisdiction over the out-of-state defendant. Such examination of affiliating circumstances is only appropriate in the analysis of the forum related claim.
 
If the claim pursued arises from non-forum related activity, the plaintiff must demonstrate that in other respects the defendant has maintained "continuous and substantial" forum affiliations. International Shoe v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945); Compagnie des Bauxites de Guinea v. Ins. Co. of North America, 651 F.2d 877 (3rd Cir. 1981). Obviously this is a much higher threshold to meet for the facts required to assert this "general" jurisdiction must be "extensive and persuasive." Id. at 890 (Gibbons, J., dissenting).

 675 F.2d at 588-89 (emphasis by court). See Koenig v. International Brotherhood of Boilermakers, supra, 284 Pa Super. at 568; Union National Bank of Pittsburgh v. L.D. Pankey Institute, 284 Pa Super. 537, 541-42, 426 A.2d 624 (1980).

 The New York Fed is a federally-chartered corporate entity, created pursuant to the Federal Reserve Act of 1913 and operates under the general supervision of the Federal Reserve Board. The United States is divided into twelve (12) Federal Reserve Districts. The New York Fed is located in the Second Federal Reserve District and serves the geographic area that includes the State of New York, part of southwestern Connecticut and the twelve northerly counties of New Jersey. The capital stock of the New York Fed is owned entirely by member banks within that geographic region. 12 U.S.C. § 321. The New York Fed ...


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