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LEONARD A. FEINBERG, INC. v. CENTRAL ASIA CAPITAL

March 28, 1996

LEONARD A. FEINBERG, INC. t/a MR. NOAH
v.
CENTRAL ASIA CAPITAL CORPORATION, LIMITED and FASHION WILL LIMITED



The opinion of the court was delivered by: PADOVA

 Padova, J.

 March 28, 1996

 Plaintiff, Leonard A. Feinberg, Inc., a Pennsylvania corporation, filed a nine count complaint against Central Asia Capital Corporation, Limited ("Central Asia") and Fashion Will Limited ("Fashion Will"), both Hong Kong corporations. *fn1" Central Asia moves to dismiss Plaintiff's Complaint pursuant to Fed. R. Civ. P. 12(b)(2), alleging this Court cannot exercise personal jurisdiction. For the following reasons, I will deny Central Asia's Motion.

 I. FACTS

 Plaintiff's Complaint alleges the following facts. Plaintiff imports and sells ladies' and children's clothing in the United States. Fashion Will supplies Plaintiff with raw materials and finished garments. In March, 1995, Plaintiff contracted with Fashion Will to purchase 30,000 dozen cotton rompers. *fn2" Fashion Will requested that Plaintiff obtain a letter of credit naming Fashion Will as the beneficiary. *fn3" On March 28, 1995, Plaintiff caused Meridian Bank ("Meridian"), located in Philadelphia, Pennsylvania, to issue a letter of credit ("Letter 1") in the amount of $ 1,000,000, naming Fashion Will as the beneficiary. Under Letter 1, after Fashion Will presented specified shipping documents to Meridian indicating that Fashion Will was making a shipment of merchandise to Plaintiff, Meridian would advance Fashion Will the purchase price for the merchandise; Plaintiff remained ultimately liable to Meridian.

 On March 30, 1995, Fashion Will asked Plaintiff to modify Letter 1 to add a "red clause" which limited

 Compl. at P 11. Fashion Will told Plaintiff that without the red clause, Fashion Will could not purchase the rompers. On April 4, 1995, the red clause was added to Letter 1. The red clause allowed Central Asia to advance Fashion Will the monies required to purchase Plaintiff's merchandise without requiring Fashion Will to first present the shipping documents. In the future, after Fashion Will shipped the merchandise to Plaintiff, Central Asia would present the specified shipping documents to Meridian in conjunction with its request for reimbursement.

 On April 6, 1995, Fashion Will requested further amendment to Letter 1 because of rising yarn prices, and on April 10, 1995, Plaintiff caused Meridian to modify Letter 1 and extend certain dates. Fashion Will made similar extension requests on June 12, 1995, June 26, 1995, and July 26, 1995, and Plaintiff granted them on June 14, 1995, July 11, 1995, and July 26, 1995 respectively. On July 18, 1995, July 20, 1995, and September 5, 1995, Plaintiff further modified Letter 1, each time increasing its amount, bringing it to $ 1,873,655.

 Also on April 10, 1995, Central Asia sent a facsimile to Meridian stating that it had advanced Fashion Will $ 600,000 pursuant to Letter 1's red clause. Central Asia attached the appropriate documentation, i.e. "sight drafts and an undertaking by Fashion Will addressed to Plaintiff, dated April 8, 1995, that the advance was being used to purchase raw materials or finished goods." Compl. at P 15. Central Asia repeatedly advised Meridian of its advances to Fashion Will via facsimile, with the same accompanying documentation, on July 21, 1995, July 25, 1995, September 11, 1995, and September 14, 1995. After Central Asia sent each facsimile to Meridian, it mailed copies of the undertakings by Fashion Will to Meridian's office in Philadelphia.

 On September 1, 1995, Fashion Will told Plaintiff that a typhoon in China had flooded its factory and damaged the merchandise, necessitating a new letter of credit. Plaintiff then caused Meridian to issue a second letter of credit ("Letter 2") for $ 310,199.18, which also contained a red clause. On September 27, 1995, Fashion Will informed Plaintiff that financial difficulties would preclude Fashion Will from filling Plaintiff's orders. At this meeting, Fashion Will also admitted that it used the red clause advances to pay down and reduce its indebtedness to Central Asia. Specifically, the collateral securing Fashion Will's loan from Central Asia had decreased in value; "Central Asia pressured [Fashion Will] to pay off the loans[;] and [Fashion Will] used, and Central Asia accepted, the red clause advances to reduce that indebtedness." Compl. at P 41. Fashion Will never used the money to purchase raw materials or finished goods for Plaintiff, and Fashion Will has no intention of fulfilling its commitments to Plaintiff for the shipment of merchandise covered by Letter 1 and Letter 2. On December 1, 1995, Central Asia made calls upon Meridian on Letter 1 and Letter 2. See Judah Labovitz Aff. at P 2, Pl.'s Mem. Opp. Ex. A.

 II. STANDARD OF REVIEW

 The Court enjoys "considerable procedural leeway" in deciding a motion to dismiss for lack of personal jurisdiction: "it may determine the motion on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion." Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981) (citing inter alia Data Disc, Inc. v. Sys. Tech. Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977)). If the court decides not to conduct an evidentiary hearing, the plaintiff "need make only a prima facie showing of jurisdiction through its affidavits and supporting materials." Id. Plaintiff must eventually establish jurisdiction by a preponderance of the evidence, "either at a pretrial evidentiary hearing or at trial. But, until such a hearing is held, a prima facie showing suffices, notwithstanding any controverting presentation by the moving party, to defeat the motion." Id. See Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 676 (1st Cir. 1992) (noting that if the court denies the motion to dismiss, "it implicitly . . . states that a hearing and determination of the motion to dismiss will be deferred until trial"); LaRose v. Sponco Mfg., Inc., 712 F. Supp. 455, 458 (D.N.J. 1989) (finding "Plaintiff need only establish a prima facie case of jurisdiction at ...


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