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LESHORE CALGIFT CORP. v. TOTAL GRAPHICS INC.

September 12, 1986

LESHORE CALGIFT CORP., Plaintiff
v.
TOTAL GRAPHICS INC./MARKETING INCENTIVES, A DIVISION OF TOTAL GRAPHICS, INC.; and ARTHUR BARTELL, Defendants


Edwin M. Kosik, United States District Judge.


The opinion of the court was delivered by: KOSIK

EDWIN M. KOSIK, UNITED STATES DISTRICT JUDGE

 The plaintiff, Leshore Calgift Corp. [hereinafter "Leshore"], filed a complaint against the defendants, Total Graphics, Inc. [hereinafter "Total Graphics"] and Arthur Bartell *fn1" on March 19, 1986. On April 9, 1986 the defendant Total Graphics filed a motion to dismiss the complaint for lack of jurisdiction over its person, insufficiency of process, insufficiency of service of process and improper venue. Total Graphics filed a memorandum in support of its motion to dismiss on April 21, 1986. On May 6, 1986 the plaintiff Leshore filed its memorandum in opposition to Total Graphics' motion to dismiss. Total Graphics submitted its reply memorandum in support of its motion on May 21, 1986. Plaintiff filed a sur reply memorandum in opposition to the motion to dismiss on June 4, 1986.

 The complaint arose out of the following set of facts. Arthur Bartell had a company known as Imperial Advertising, Inc. Bartell's company had a contract with plaintiff Leshore. The contract involved the purchasing of numerous balloons which would be imprinted with the Burger King logo and eventually sold to Burger King. Leshore advanced commissions to Bartell in anticipation of the Burger King order. After Leshore allegedly purchased the balloons and advanced commissions to Bartell and prior to securing a contract with Burger King, Bartell's Company, Imperial Advertising, went bankrupt. Bartell then approached defendant Total Graphics seeking employment and was hired by Total Graphics. Subsequently, Leshore and Total Graphics began negotiating the terms of an agreement whereby Total Graphics would assume Bartell's debt owed to Leshore, both for the cost of the balloons and the commissions advanced to Bartell. Apparently an agreement was reached and Total Graphics made two partial payments to Leshore on the debt. However, a dispute then arose concerning whether Leshore ever paid for the balloons in question. Total Graphics stopped all payments to Leshore and Leshore then filed this action.

 In its motion to dismiss, defendant Total Graphics contends that the United States District Court for the Middle District of Pennsylvania has no jurisdiction over its person because it did not have any contact with Pennsylvania in this action. Secondly, Total Graphics alleges that the complaint should be dismissed because service of process of the complaint was insufficient due to the fact that the summons issued was not directed to anyone and because service of this action was improper since it exceeded the reach of the long arm statute. Finally, Total Graphics claims that the complaint should be dismissed, or in the alternative transferred to the Southern District of Florida, because venue is not proper in the Middle District of Pennsylvania.

 In response to the defendant Total Graphics' motion the plaintiff at the outset argues that the motion should be dismissed for failure to comply with the Local Rules of this Court. Specifically the plaintiff claims that defendant's motion violated Local Rule 401.1 by not containing a certificate of concurrence or nonconcurrence and a proposed order. Plaintiff also claims that defendant violated Local Rule 401.8 because defendant's brief in support of its motion lacked a statement of the case's facts. We find no merit to this argument.

 Defendant's reply brief contained a certificate of nonconcurrence with its motion from plaintiff's counsel. Defendant also enclosed a proposed order with its reply brief. Thus Local Rule 401.1 is satisfied. We find that the facts contained in defendant's brief in support of its motion and defendant's stipulation to plaintiff's version of this case's procedural history *fn2" adequately comply with Local Rule 401.8.

 Now, we shall address the defendant Total Graphics' first claim which is that this Court lacks in personam jurisdiction over it. In support of its claim defendant argues that it does not have the requisite "minimum contacts" with Pennsylvania and in fact has had no contact at all with Pennsylvania. On the other hand the plaintiff argues that this Court has the power to hear and determine this action because jurisdiction is obtained over the defendant by virtue of the Pennsylvania Long Arm Statute.

 In a diversity action, a federal court must conduct a two prong test to determine if it has in personam jurisdiction over a non-resident defendant. The Court must first determine if the defendant's conduct brought him within the requirements of the forum state's long arm statute. Controlled Metals Inc. v. Non-Ferrous International Corp., 410 F. Supp. 339, 341 (E. D. Pa. 1976); Donner v. Tams-Witmark Music Library Inc., 480 F. Supp. 1229, 1231-1232 (E. D. Pa. 1979). If the requirements of the long arm statute are satisfied, then the court must establish if the defendant had minimal contacts with the forum state so that the exercise of personal jurisdiction will not offend due process. International Shoe v. Washington, 326 U. S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945); World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 291-292, 100 S. Ct. 559, 564, 62 L. Ed. 2d 490 (1980). *fn3" In applying the first prong of the aforementioned test we must determine if defendant's conduct brought it within the requirements of Pennsylvania's Long Arm Statute. Pennsylvania's Long Arm Statute provides that Pennsylvania Courts can exercise in personam jurisdiction over a person "transacting any business in this Commonwealth." 42 Pa. C.S.A. § 5322(a)(1). For purposes of the Long Arm Statute, transacting business includes "the shipping of merchandise directly or indirectly into or through this Commonwealth." 42 Pa. C.S.A. § 5322(a)(1)(iii). It also includes "the engaging in any business or profession within this Commonwealth, whether or not such business requires license or approval by any government unit of this Commonwealth." 42 Pa. C.S.A. § 5322(a)(1)(iv). In the affidavit of Lew Ginsberg, President of Total Graphics, he avers that even though defendant Total Graphics is not licensed in Pennsylvania, it does sell merchandise in Pennsylvania. *fn4" Thus, according to defendant's own admission it transacts business in Pennsylvania for purposes of the Long Arm Statute, specifically by the shipping of its products into Pennsylvania and by its engaging in business in Pennsylvania. Therefore, defendant's conduct brings it within the requirements of Pennsylvania's Long Arm Statute.

 Since the first prong of the stated test is met as discussed above, we next address the second prong and determine if defendant had minimal contacts with Pennsylvania.

 According to Pennsylvania's Long Arm Statute, Pennsylvania Courts are authorized to extend jurisdiction over non-residents "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." 42 Pa. C.S.A. § 5322(b). [Emphasis added]. To determine whether the necessary "minimum contacts" for establishing jurisdiction over a nonresident defendant exist, the Court should consider the state's interest in adjudicating the dispute within its borders and the possible unfairness of compelling a party to litigate in a distinct forum. Donner v. Tams-Witmark Music Library, supra, 480 F. Supp. at 1232; Empire Abrasive Equipment Corp. v. H. H. Watson, Inc., 567 F.2d 554, 557-58 (3d Cir. 1977).

 Pennsylvania clearly has an interest in adjudicating a dispute between a resident corporation, i.e. plaintiff Leshore, and a nonresident corporation which sells merchandise in Pennsylvania, i.e. defendant Total Graphics. Moreover, in the present case defendant may have engaged in a series of negotiations with plaintiff in Pennsylvania over the assignment of Bartell's debt owed to plaintiff, specifically from March 15, 1985 until May 1, 1985. *fn5" Additionally, defendant Total Graphics has had prior dealings with other Pennsylvania residents. The defendant employs an independent contractor in Pennsylvania who solicits orders in Pennsylvania for the sale of its product line in Pennsylvania. *fn6" Therefore, we hold that Pennsylvania has an interest in adjudicating the dispute between plaintiff and defendant within its borders.

 We also find that there is no inequity in requiring the defendant to litigate the instant action in Pennsylvania. Defendant engages in business in Pennsylvania and may have had a course of negotiations with plaintiff, a Pennsylvania Corporation, involving the resolution of Bartell's debt owed to plaintiff. When defendant Total Graphics began paying on Bartell's debt in March of 1985 and June of 1985 by wiring the money to plaintiff Leshore in Pennsylvania, it could anticipate that if a dispute were to occur it would have to litigate in Pennsylvania. Thus, we find that the contacts of Total Graphics with Pennsylvania are sufficient to support our jurisdiction over it.

 We next address defendant's claim that venue is not proper in the Middle District of Pennsylvania. This issue is governed by Title 28 United States Code Section 1391(a) which provides: "[a] civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in the judicial district where all plaintiffs or all defendants reside, or in which the claim arose." [Emphasis added]. In the instant case, jurisdiction of this Court is invoked on grounds of diversity of citizenship, Title 28 United States Code Section 1332. All plaintiffs in this action namely, Leshore, reside in Archbald, Pennsylvania, which is situated in the Middle District of Pennsylvania. Therefore, leaving aside the question of where the claim ...


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