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Stranahan Gear Co. v. NL Industries Inc.

filed: August 22, 1986.

STRANAHAN GEAR COMPANY, INC.
v.
NL INDUSTRIES, INC. V. BLUE STREAK INDUSTRIES, INC., NL INDUSTRIES, INC. APPELLANT



Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 83-3259).

Before: Aldisert, Chief Judge, and Higginbotham, Circuit Judge, and Re, Judge.*fn*

Author: Aldisert

ALDISERT, Chief Judge.

We must decide whether the district court erred in opening a default judgment against a third party defendant on the ground that the third party plaintiff had not complied with the requirements for service of process of Rule 4(c)(2)(C)(ii), F.R. Civ. P., because the third party defendant refused to acknowledge receipt of service. We must also decide whether the district court erred in subsequently dismissing the third party complaint for lack of personal jurisdiction. We affirm.

I.

Blue Streak Industries, Inc., a Louisiana corporation, builds "jack-up barges" for use with offshore oil rigs in the Mississippi Delta region. Prior to the events giving rise to this action, Blue Streak had placed four order with NL Industries, Inc., a New Jersey Corporation, for special gearbox assemblies for use on its barges. These assemblies are manufactured in Langhorne, Pennsylvania by Stranahan Gear Company, Inc., a Pennsylvania corporation, and are distributed by NL Rucker Products, a division of NL Industries.

In February 1982, Blue Streak agreed to purchase another one hundred special gearbox assemblies from NL. Stranahan shipped the assemblies from Pennsylvania directly to Blue Streak in Chalmette, Louisiana, but Blue Streak refused to accept delivery or to pay for a portion of the shipment. Blue Streak then sent its Director of Materials, Vic Bares, to the Stranahan facility in Langhorne, Pennsylvania for meetings with Stranahan regarding the order. The first meeting occurred in June or July, 1982. Bares again visited the Stranahan facility in August or September, 1982.

Stranahan filed suit in the district court against NL demanding payment for the order. NL filed a third party complaint against Blue Streak alleging that Blue Streak had breached its agreements with NL and had "entered into separate negotiations [with Stranahan] purporting to extend and delay the delivery items of NL's contract with Blue Streak and add an interest charge upon such undelivered goods." App. at 31a. NL attempted to serve Blue Streak pursuant to Rule 4(c)(2)(C)(ii), F.R. Civ. P., by mailing a summons and third party complaint directly to Blue Streak at its office in Louisiana. NL included two copies of a form 18-A notice and acknowledgement as required by the Rule. Blue Streak apparently received the mail service of process but did not return the acknowledgement form or otherwise respond to NL's third party complaint.

After the response time had expired, NL filed praecipes for the entry of default and default judgment against Blue Streak. As proof of service, NL submitted the affidavit of Donald Smith, an employee of NL, who stated that he had been told by Dennis Good, Blue Streak's President, that Blue Streak had received NL's service of process in the mail. The district court entered a default judgment on October 28, 1983 in the amount of $380,925.00 plus interest and costs.

Subsequently, Blue Streak moved to strike the default judgment. The district court granted Blue Streak's motion, holding that the default judgment was void because service was ineffective under Rule 4(c)(2)(C)(ii), F.R. Civ. P.

Pursuant to Rule 4, NL then properly served Blue Streak by personal service upon its agent for service in Louisiana. Blue Streak moved to dismiss NL's claims on the grounds that the district court lacked in personam jurisdiction. The district court granted this motion and dismissed NL's claims against Blue Streak. NL appeals.

II.

The standard of review of the district court's ruling on a motion to strike a default judgment for lack of proper service is plenary. Gold Kist, Inc. v. Laurinburg Oil Company., 756 F.2d 14 (3d Cir. 1985); Boughner v. Secretary of NEW, 572 F.2d 976 (3d Cir. 1978). To the extent that the district court's subsequent order dismissing NL's complaint for lack of personal jurisdiction is based on findings of fact, these findings will not be disturbed unless clearly erroneous. To the extent that its conclusion is based on the application and ...


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