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Kontonotas v. Hygrosol Pharmaceutical Corp.

October 2, 2009


The opinion of the court was delivered by: Jacob P. Hart United States Magistrate Judge


In this case, plaintiff George Kontonotas ("Kontonotas") seeks to recover from defendants Hygrosol Pharmaceutical Corporation ("Hygrosol"), Spiro Spireas and Sanford Bolton amounts he claims are due to him as commissions for acting as a broker between the defendants and United Research Laboratories and Mutual Pharmaceutical Co., Inc. ("URL/Mutual").

Bolton was not added as a defendant until Kontonotas filed his Second Amended Complaint. He now moves to dismiss the action against him for lack of personal jurisdiction. As explained below, his motion will be denied.

I. Legal Standard

A federal district court may assert personal jurisdiction over a nonresident of the state in which the court sits to the extent authorized by the law of that state. D'Jamoos v. Pilatus Aircraft, 566 F.3d 94, 102 (3d Cir. 2009). The Pennsylvania long-arm statute provides for jurisdiction "based on the most minimum contact with th[e] Commonwealth allowed under the Constitution of the United States." 42 Pa. C.S.A. § 5322(b). Accordingly, the issue here is whether Bolton has minimum contacts with Pennsylvania such that the maintenance of this suit against him does not offend traditional notions of fair play and substantial justice. D'Jamoos, supra, citing International Shoe Co. v. Washington, 329 U.S. 310, 316 (1945).

There are two types of personal jurisdiction: general and specific. Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 300 (3d Cir. 2008). General jurisdiction exists when a defendant has maintained systematic and continuous contacts with the forum state, whereas specific jurisdiction exists when the claim arises from or relates to conduct purposely directed at the forum state. Kehm, supra, citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15 and n. 9 (1984).

In determining whether personal jurisdiction exists, a court must undertake a three part inquiry. D'Jamoos, supra. First, the defendant must have purposely directed his activities at the forum; second, the litigation must arise out of, or relate to, at least one of the defendant's activities; third, if the first two requirements are met, the court may consider whether the exercise of jurisdiction otherwise comports with the concepts of "fair play and substantial justice." D'Jamoos, supra, citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985).

When a defendant challenges a court's exercise of personal jurisdiction, the plaintiff bears the burden of establishing that personal jurisdiction exists. D'Jamoos, supra, at 102. However, he need only establish a prima facie case, and his allegations will be taken as true and factual disputes will be resolved in his favor. Id.

II. Discussion

Bolton is a fifty-percent shareholder, and an officer, of defendant Hygrosol Pharmaceutical Corporation. Since Hygrosol moved to Newton, Pennsylvania, in 1999, Bolton has visited Pennsylvania a number of times for shareholder meetings. He has also had telephonic contact in Pennsylvania with defendant Spiro Spireas, the only other Hygrosol shareholder, to conduct Hygrosol business. Bolton maintains, however, that these contacts -- which appear to be his only contacts with Pennsylvania -- are insufficient to confer this court with personal jurisdiction over him.

Nevertheless, it is apparent that Bolton's actions in Pennsylvania were purposely taken in order to avail himself of the privilege of maintaining a corporation here. It is also apparent that Bolton was actively involved in the various aspects of running Hygrosol. He was not just a friend of Spireas's who had money to invest -- he, along with Spireas, is a chemist, and was in fact Spireas's advisor for his dissertation. Deposition Excerpt, Deposition of Sanford Bolton, Ph.D., attached as Exhibit 1 to Plaintiff's Response, at 18. Minutes of Hygrosol's annual meetings show that Bolton was the co-owner with Spireas of certain patents which later became the property of Hygrosol. Annual Meeting Minutes, attached as Exhibit 2 to Plaintiff's Response, at 1998 Minutes.

The minutes also show that Bolton was involved in business decisions regarding arrangements with URL/Mutual, some of which are the subject of this action, and that he benefitted from those business dealings. Id. at 1998 and 2005 Minutes. He was also involved in discussions on threatened and actual lawsuits. Id. at 2006, 2007, 2008 and 2009 Minutes. Although Bolton testified at his deposition that not all annual meetings took place in Newton, Pennsylvania, the minutes all reflect that the meetings were held there. Exhibit 1 at 157.

Kontonotas has, therefore, made a prima facie showing that Bolton has purposely directed his activities at Pennsylvania, and that this litigation arises out of, or relates to, his Hygrosol-related activities.

As Bolton points out, cases exist in which acts taken by a corporate officer in his corporate capacity are found to be insufficient to give a court personal jurisdiction over the individual officer. In re DaimlerChrysler Securities Litigation, 247 F. Supp. 2d 579, 584-588 (D. Del. 2003); Overseas Partners, Inc. v. PROGEN Musavirlik v. Yonetim Hizmetleri, Ltd. Sikerti, 15 F. Supp.2d 47, 51 (D.D.C. 1998); Mates v. North American Vaccine, ...

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