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Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Products Co.

January 26, 1996

VETROTEX CERTAINTEED CORPORATION, APPELLANT

v.

CONSOLIDATED FIBER GLASS PRODUCTS COMPANY



On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 94-2947)

BEFORE: ROTH, LEWIS and GARTH, Circuit Judges

GARTH, Circuit Judge

Argued Monday, December 11, 1995 *fn1

filed January 26, 1996)

OPINION OF THE COURT

Plaintiff-appellant Vetrotex CertainTeed Corporation ("Vetrotex"), a Pennsylvania corporation, brought suit in the federal district court for the Eastern District of Pennsylvania against defendant-appellee Consolidated Fiber Glass Products Company ("Conglas"), a California corporation. The issue presented in this appeal is whether the district court properly dismissed the complaint of Vetrotex for lack of personal jurisdiction. Because it is not contested that general jurisdiction does not lie, and because we find that Conglas has not purposefully directed its activities toward Pennsylvania for purposes of specific jurisdiction, we will affirm.

I.

Vetrotex is a Pennsylvania corporation engaged in the manufacture and sale of various fiber glass reinforcement products. Vetrotex, which was incorporated in March of 1991, is a wholly-owned subsidiary of CertainTeed Corporation ("CertainTeed"), another Pennsylvania corporation. Vetrotex is a national corporation with facilities and offices in several states, including California. Conglas is a California corporation engaged in the manufacture of fiber glass roofing products, including fiber glass mats. Conglas has no offices, employees or representatives in Pennsylvania, nor has it ever sold any of its products in Pennsylvania, or engaged in sales to distributors or other third parties who sell Conglas products in Pennsylvania.

Between 1980 and 1989, Conglas and CertainTeed engaged in sporadic contracts for fiber glass products, which culminated in a letter dated May 19, 1989 from CertainTeed to Conglas, stating that CertainTeed would not be able to supply all of Conglas's needs for glass and urging Conglas to go to another vendor for glass. The CertainTeed letter concluded by stating: "Finally, Jack, I want to thank you for our business relationship over the past years. I plan on continuing this contact for none of us can foretell the future and its opportunities." After this arrangement was terminated, Conglas had no further business relationship with CertainTeed. *fn2

In February of 1991, CertainTeed again found itself with a supply of chopped strands to sell, and it communicated with Conglas to ascertain if Conglas would be interested in purchasing "44E" chopped strand. During the week of February 11, 1991, CertainTeed met with representatives of Conglas in California to solicit Conglas's purchase of CertainTeed's fiber glass materials. On February 25, 1991, CertainTeed wrote and forwarded an agreement to Conglas in California. Upon receiving the letter, Conglas executed the agreement and returned it to CertainTeed's headquarters in Valley Forge, Pennsylvania (the "1991 Supply Agreement").

In March of 1991, Vetrotex was incorporated as CertainTeed's wholly-owned subsidiary in charge of fiber glass reinforcement products operations.

In January of 1992, representatives of CertainTeed/Vetrotex flew to California and met with Conglas to discuss a continuation of CertainTeed's agreement to sell chopped strands to Conglas. At that meeting, the essential terms of a new agreement were negotiated between Conglas and CertainTeed/Vetrotex. Conglas did not send representatives to Pennsylvania to meet with Vetrotex. Conglas did, however, place some telephone calls to CertainTeed/Vetrotex's offices in Valley Forge, Pennsylvania in the course of negotiating the renewal of the 1991 Supply Agreement On March 13, 1992, CertainTeed/Vetrotex and Conglas renewed the 1991 Supply Agreement (now the "1992 Supply Agreement"). The 1992 Supply Agreement was prepared by CertainTeed/Vetrotex and sent to Conglas in California, where it was executed. The 1992 Supply Agreement provided for a two-year contract period that would automatically be renewed for an additional one-year period commencing April 1, 1994, unless canceled upon sixty-days notice.

Under the 1992 Supply Agreement, Vetrotex agreed to ship fiber glass material directly from its plant in Wichita Falls, Texas, to Conglas's manufacturing facility in Bakersfield, California. Vetrotex's invoicing for the product sold under the 1992 Supply Agreement was handled by Vetrotex's Southern California office, and all payments for the fiber glass material were sent to Vetrotex's office in Los Angeles, California. Conglas's primary contact at Vetrotex was Jerry Leland, a sales representative working out of Vetrotex's Santa Ana, California office.

In 1993, Vetrotex decided to withdraw from the fiber glass chopped strand business and sought to terminate its contract with Conglas. Vetrotex claims that it canceled the 1992 agreement by telephone on December 2, 1993, more than sixty days prior to the April 1, 1994 deadline. According to Conglas, it was only on March 23, 1994 that Vetrotex telephoned Conglas in California with the information that Vetrotex would not sell any more fiber glass chopped strand product to Conglas after March 31, 1994. Vetrotex ceased delivery of 44E strand, and Conglas withheld payment on outstanding invoices.

On May 12, 1994, Vetrotex brought the present diversity action against Conglas in the Eastern District of Pennsylvania, seeking to recover $303,595.35 in withheld payments from Conglas. Shortly thereafter, Conglas sued Vetrotex in California state court, seeking damages for breach of the 1992 Supply Agreement. Vetrotex then removed the California action to the Central District of California, where it is currently stayed pending the resolution of this appeal. Vetrotex has not yet counterclaimed in the California action, but admitted at oral argument before us that there is no impediment to its filing a counterclaim in that action.

On July 5, 1994, Conglas moved to dismiss Vetrotex's Pennsylvania action for lack of personal jurisdiction or, alternatively, for improper venue. On October 18, 1994, the district court for the Eastern District of Pennsylvania issued a memorandum and order entered on October 20, 1994, dismissing Vetrotex's complaint without prejudice for lack of personal jurisdiction.

The district court found the relevant and dispositive facts, which we recite in text, infra, to be undisputed. Accordingly, the district court concluded that Conglas's contacts with Pennsylvania were "marginal and were not directed at Pennsylvania to benefit from its laws" and held that to exercise jurisdiction over Conglas "would ...


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