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Time Share Vacation Club v. Atlantic Resorts

May 24, 1984


On Appeal from the United States District Court for the Eastern District of Pennsylvania. Submitted Under Third Circuit Rule 12(6)

Seitz, Chief Judge, Garth, Circuit Judge, and Diamond, District Judge.*fn*

Author: Garth


GARTH, Circuit Judge:

This appeal is taken by plaintiff Time Share Vacation Club ("Time Share") from the dismissal of Time Share's breach of contract action against defendants Atlantic Coast Resorts, Ltd. ("Atlantic"), Coastal Marketing Associates, Inc. ("Coastal") and Martin L. Schuman, Jr.*fn1 The district court dismissed the complaint under Fed. R. Civ. P. 12(b)(2) for lack of in personam jurisdiction.*fn2 We affirm.


Time Share, a Pennsylvania corporation with principal offices in Philadelphia, alleged that it entered into a contract with defendants Atlantic and Coastal on July 24, 1982. Under this contract, Time Share was to attract potential customers to purchase vacation "interval time shares" at the development known as "Atlantic Resorts," located in Ocean Pines, Maryland. Atlantic, Coastal, and Schuman were all citizens of Maryland. The contract allegedly provided that Time Share would receive a commission on all sales made through its promotional efforts, and was to receive reimbursement for costs and labor. This agreement was apparently signed by Martin Schuman as President and controlling shareholder of both Atlantic and Coastal, and was executed in Maryland.

The complaint alleged that Atlantic and Coastal breached this agreement when they failed to reimburse Time Share for various expenses, totalling $74,000. Time Share also sought $252,000 in lost profits and commissions.*fn3 The action was brought in the Eastern District of Pennsylvania, with jurisdiction based on diversity of citizenship.

In lieu of an answer, defendants filed a motion to dismiss for lack of in personam jurisdiction. Fed. R. Civ. P. 12(b)(2). The district court, without opinion, granted the motion and dismissed the action against all defendants. It is from this order that Time Share appeals.


The sole issue before us is whether Time Share has established that defendants had sufficient contact with the Commonwealth of Pennsylvania such that a court may properly exercise personal jurisdiction over them. Once a jurisdictional defense has been properly raised, "the plaintiff bears the burden of demonstrating contacts with the forum state sufficient to give the court in personam jurisdiction." Compagnie des Bauxites de Guinee v. L'Union, 723 F.2d 357 (3d Cir. 1983) (Seitz, C.J.).


Rule 4(e) of the Federal Rules of Civil Procedure permits a district court to assert personal jurisdiction over a nonresident to the extend allowed under the law of the state where the district court sits. In turn, the Pennsylvania Long Arm Statute, Pa. Stat. Ann. tit. 42, ยง 5322(b) (Purdon 1981) allows a court to exercise jurisdiction over a person "to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." Thus, the reach of the Pennsylvania statute is coextensive with the due process clause of the United States Constitution.

Under the due process clause, a court may not exercise personal jurisdiction over a non-resident defendant unless there are certain minimum contacts between the defendant and the forum state. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980). Essentially, before hearing a case, a court must ask whether "the quality and nature of the defendant's activity is such that it is reasonable and fair to require [that it] conduct [its] defense in that state." Kulko v. Superior Court of California, 436 U.S. 84, 92, 56 L. Ed. 2d 132, 98 S. Ct. 1690 (1978)(quoting International Shoe Co. v. Washington, 326 U.S. 310, 316-17, 90 L. Ed. 95, 66 S. Ct. 154 (1940)).

In interpreting this constitutional standard, the Supreme Court has determined that, in order for a non-resident defendant to be subject to the jurisdiction of the court, it must have purposefully availed itself of the privilege of acting within the forum state. World-Wide Volkswagen, 444 U.S. at 295; Hanson v. Denkla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958). Pennsylvania courts have also articulated the constitutional standards of due process as they are incorporated into the Pennsylvania statute. In Proctor & Schwartz v. Cleveland Lumber Co., 228 Pa. Super. 12, 323 A.2d 11 (1974), ...

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