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PENZOIL PRODS. CO. v. COLELLI & ASSOCS.

February 7, 1997

PENZOIL PRODUCTS COMPANY, Plaintiff,
v.
COLELLI & ASSOCIATES, INC., COLELLI OIL WELL SERVICES, INC., PYRAMID TREATING, INC., T.O.P PRODUCTION & OILFIELD SERVICES. INC., and CHEMICAL SOLVENTS, INC., Defendants.



The opinion of the court was delivered by: MCLAUGHLIN

 McLAUGHLIN, J.

 This is a products liability case. Our jurisdiction is based on diversity of citizenship under 28 U.S.C. § 1332. Presently pending before this Court is Defendants' Colelli & Associates, Inc. and Colelli Oil Well Services, Inc. motion to dismiss for lack of personal jurisdiction. *fn1" The other Defendants have not joined in the motion. For the reasons set forth below, Defendant's motion is granted.

 I. BACKGROUND

 Plaintiff Penzoil Products Company ("PPC") is a Nevada corporation with its principal place of business in Houston, Texas. Among other things, PPC operates a refinery located in Rouseville, Pennsylvania for which it purchases Penn grade and Corning grade crude oil from oil producers in Ohio. Defendants Colelli & Associates, Inc. ("CAI") and Colelli Oil Well Services, Inc. ("COWSI") are Ohio corporations with their principle places of business in New Philadelphia, Ohio. CAI and COWSI are in the oil well maintenance business. CAI distributes chemicals that are used to clean residue from oil wells. COWSI contracts with oil producers to clean and maintain oil wells.

 Toluene is a chemical used to control paraffin buildup in oil wells. PPC claims that the toluene used by COWSI (and distributed by CAI) to clean oil wells in Ohio contained silicone; and that the silicone mixed with the crude oil extracted from those wells that was shipped to Pennsylvania and caused harm to PPC's refining equipment in it's Rouseville facility. PPC's complaint alleges causes of action for strict liability and negligence.

 The record contains no evidence indicating that either CAI or COWSI have any direct business contacts with Pennsylvania. Apparently, both companies do business in Ohio with Ohio oil producers. In opposition to CAI and COWSI's motion, PPC has submitted an affidavit from its Crude Oil Representative, John Wesley ("Wesley"), which states that it is common industry knowledge that 60% percent of all Penn grade and Corning grade crude produced in Ohio is sold to two Pennsylvania refineries, one of which is PPC's Rouseville facility. Wesley also states that CAI and COWSI President, Cam Colelli ("Colelli"), was aware of past incidents of chlorine contamination in crude oil delivered to PPC's Rouseville refinery; and that Colelli had worked with Rouseville lab personnel on the problem, providing PPC with solvent samples. Wesley further states that Colelli had participated in a trade association seminar, presented by a PPC representative, addressing crude oil contamination issues. Additionally, PPC submitted the deposition of Colelli wherein he admits, in substance, that he knew that silicone in solvents used to clean wells could mix with crude oil and be transported to refineries.

 When a defendant raises the defense of lack of personal jurisdiction, the burden falls upon the plaintiff to come forward with sufficient facts to establish that jurisdiction is proper. Mellon Bank (East) PSFS, N.A. v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992) (citing Carteret Savings Bank v. Shushan, 954 F.2d 141 (3d Cir. 1992), cert. denied, 506 U.S. 817, 121 L. Ed. 2d 29, 113 S. Ct. 61 (1992)). The plaintiff meets this burden by making a prima facie showing of "sufficient contacts between the defendant and the forum state." Mellon East, 960 F.2d at 1223 (citing Provident Nat. Bank v. California Fed. Sav. & Loan Assoc., 819 F.2d 434 (3d Cir. 1987)).

 III. DISCUSSION

 As an initial matter, we reject PPC's argument that CAI and COWSI as have waived the defense of lack of personal jurisdiction by proceeding with litigation on the merits under Insurance Corp. v. Compagnie Des Bauxites, 456 U.S. 694, 704, 72 L. Ed. 2d 492, 102 S. Ct. 2099 (1981) and Weybrough & Loser v. Pelmor Laboratories, Inc., 376 F.2d 543, 546 (3d Cir. 1967). Defendants filed the instant motion on August 14, 1996, four months after the amended complaint. As indicated in note 1, supra, the defense had been preserved in the answers. Furthermore, CAI and COWSI had not proceeded with substantial discovery on the merits before filing the motion. The material submitted by PPC show that the only discovery conducted prior to this motion was initiated by PPC. *fn2" Therefore, we turn our attention to the merits of the motion.

 A federal court's authority to exercise personal jurisdiction over non-resident defendants is conferred by the law of the state in which it sits. Fed.R.Civ.P. 4(e); Mellon, 960 F.2d at 1221. The limits on the extent to which that authority may be exercised are provided by the Due Process Clause of the Fourteenth Amendment to the Federal Constitution. Kulko v. California Supreme Court, 436 U.S. 84, 91, 56 L. Ed. 2d 132, 98 S. Ct. 1690 (1978). Pennsylvania's long arm jurisdiction statute authorizes courts to exercise jurisdiction to the "fullest extent allowed under the Constitution of the United States." 42 Pa.C.S.A. § 5322(b). "Therefore, this Court's inquiry is solely whether the exercise of personal jurisdiction over the defendant would be constitutional." Renner v. Lanard Toys Ltd., 33 F.3d 277 (3d Cir. 1994).

 The Constitutional limitations on the exercise of personal jurisdiction differ depending upon whether a court seeks to exercise general or specific jurisdiction over a non-resident defendant. Mellon, 960 F.2d at 1221. General jurisdiction permits a court to exercise personal jurisdiction over a nonresident defendant for even non-forum related activities when the defendant has engaged in "systematic and continuous" activities in the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16, 80 L. Ed. 2d 404, 104 S. Ct. 1868 (1984). In the absence of general jurisdiction, specific jurisdiction permits a court to exercise personal jurisdiction over a non-resident defendant for only forum-related activities where the "relationship between the defendant and the forum falls within the 'minimum contacts' framework" of International Shoe Co. v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945) and its progeny. Mellon, 960 F.2d at 1221.

 PPC does not contend that we should exercise general jurisdiction and has confined its briefs solely to the issue of specific jurisdiction. Therefore, we will only discuss specific jurisdiction. The often quoted Supreme Court language concerning specific jurisdiction teaches that the defendant must have "minimum contacts" with the forum state and that the exercise of jurisdiction must be "reasonable." Id. ...


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